“Sharks” reduce purchases, gold market becomes more unpredictable

Domestic gold demand in the first quarter of 2025 increased by 46% compared to the fourth quarter of 2024. Photo: Duc Thanh

World gold demand slows down, domestic gold demand falls from peak

The World Gold Council (WGC) report on gold demand trends in the first quarter of 2025 shows that total quarterly gold demand (including the over-the-counter market - OTC) was 1,206 tons, up 1% year-on-year, in the context of record high gold prices, surpassing the threshold of 3,000 USD/ounce. Thus, global gold demand in the first quarter of 2025 has slowed down compared to the growth rate in the first quarter of 2024 (up 3%).

In particular, the central bank sector - the driving force behind gold price growth in recent years - continued to be net buyers, but their gold demand in the first quarter of 2025 decreased by 21% compared to the same period last year.

Domestically, gold demand in the first quarter of 2025 increased by 46% compared to the fourth quarter of 2024, but decreased by 15% compared to the same period, partly due to scarce supply, partly because in the first quarter of 2024, gold demand in Vietnam was the highest in 10 years.

Dr. Nguyen Tri Hieu, an economic expert, warned that investors need to be cautious with gold at this time, because there is not much room for price increases and it is in a situation where it can turn around at any time. Furthermore, the difference between domestic and international gold prices has reached VND18 million/tael, meaning investors will have to bear a lot of risks if the world gold price adjusts.

In recent weeks, the gold price increase has also slowed down. In the first quarter of 2025, the driving force for global gold demand growth was the sharp increase in inflows into gold exchange-traded funds (ETFs). Total investment demand from gold ETFs by the end of the first quarter of 2025 increased to 552 tons, up 170% year-on-year and reaching the highest level since the first quarter of 2022. However, inflows into ETFs often rotate very quickly and at any time.

Regarding the gold market trend in the coming time, Ms. Louise Street, senior market analyst at WGC, said that the overall economic picture is still difficult to predict. That uncertainty can push up gold prices, investors continue to seek gold as a safe storage asset from organizations and individuals.

However, as the 90-day reprieve from the reciprocal tax is getting shorter, many analysts are warning investors to be cautious of the risk that gold prices could “turn around” if trade risks ease and the trade war eases. If this happens, it is very likely that world gold will return to the $3,000/ounce price range.

Supply is scarce, price difference is high, gold investment is increasingly disadvantageous

As of the beginning of this week, the difference between domestic and international gold prices has reached 19 million VND/tael, the highest level ever, higher than the time before the State Bank of Vietnam (SBV) intervened in the gold market. In a report recently sent to the National Assembly , the Governor of the SBV admitted that the difference in gold prices has increased sharply again since the beginning of April 2025 until now due to 3 main reasons.

Firstly, the expectation that world gold prices will continue to increase in the context of the tariff policies of the US President Donald Trump Administration expected to have a negative impact on the global economy; the unpredictable monetary policy roadmap of the US Federal Reserve (Fed); tense global geopolitical developments; and possible commodity price shocks that may arise, causing increased demand for gold.

Second, the supply of gold bars in the market has not increased since the beginning of 2025, the foreign exchange market and the gold market are relatively stable, so since the beginning of 2025, the State Bank has not had to intervene in the market.

In addition to the above reasons, a third reason cannot be ruled out: some businesses and individuals take advantage of market fluctuations to speculate, inflate prices, and profit.

However, the State Bank believes that the current developments in the gold market have not yet affected monetary policy management.

In fact, when exchange rates and interest rates are under pressure as they are now, the possibility of the State Bank sacrificing foreign currency to increase supply for the gold market is unlikely, because gold is not an essential commodity.

In the context of the gold market facing many risks and the possibility of the State Bank of Vietnam intervening in the market is very low, Mr. Phan Dung Khanh, a financial expert, recommends that investors should consider gold as a safe haven, instead of an investment channel. The factors supporting gold price increases are weakening and certainly cannot maintain the rapid increase as in the past. In the immediate future, gold prices will remain high because the world economy is still in a period of instability. However, at this stage, investors should only consider gold as a storage channel, if they speculate, it will be very dangerous.

Strengthening inspection of gold

The Governor of the State Bank of Vietnam stated that the gold market in the coming time will not be truly stable and sustainable, and will still be affected by psychological factors and expectations. The State Bank of Vietnam will continue to closely monitor developments in the domestic and international gold market, coordinate with relevant agencies to strengthen management and take measures to stabilize the gold market within its authority.

To stabilize the gold market in a sustainable manner, in addition to solutions from the State Bank, there needs to be synchronous participation of ministries, branches and localities under the direction of the Government and the Prime Minister. At the same time, coordinate with relevant ministries and branches to strengthen inspection and examination of the activities of gold trading enterprises, stores, agents distributing and trading gold bars and other entities participating in the market.

Source: https://baodautu.vn/ca-map-giam-mua-thi-truong-vang-ngay-cang-kho-doan-d278847.html