Gold price gap unlikely to narrow in short term

Difficult to narrow gold price gap due to continued scarcity of supply

The gap between domestic and world gold prices remains high, at around VND18 million per tael – equivalent to the level before the State Bank implemented a series of gold market intervention measures in 2024.

In a report sent to the National Assembly , the State Bank frankly acknowledged that one of the reasons why domestic gold prices are "higher" than world prices is because since the beginning of 2025, the supply of gold bars on the market has not been supplemented.

Besides, it is not impossible that some businesses and individuals take advantage of market fluctuations to speculate, inflate prices and make illegal profits.

Speaking to the press, Mr. Shaokai Fan - Director of Asia- Pacific region (excluding China) and Director of Global Central Banks of the World Gold Council (WGC) - said that Vietnam is not the only case where there is a large difference between domestic and international gold prices.

The main reason is that many countries apply policies to control gold imports such as import restrictions or high taxes, thereby causing an imbalance in supply and demand. He cited China as also being in a situation where domestic gold prices are significantly higher than world prices.

According to Mr. Fan, gold speculation in Vietnam is not an isolated phenomenon but a common reaction in highly free markets. However, he warned that management agencies need to have strict control measures to avoid excessive speculation, which can cause negative fluctuations in the market and investment environment.

Faced with this situation, in Official Dispatch No. 64/CD-TTg dated May 13, 2025, Prime Minister Pham Minh Chinh requested the State Bank to closely monitor fluctuations in domestic and world gold prices, and proactively implement market stabilization measures when necessary.

The Prime Minister also requested the State Bank to promptly announce the inspection results of enterprises and credit institutions trading in gold. The Ministry of Public Security was assigned to preside over and coordinate with the State Bank and relevant agencies to urgently deploy strong measures to strictly handle violations of the law in gold trading activities such as smuggling, speculation, market manipulation, illegal trading, etc.

However, Mr. Shaokai Fan commented that the Vietnamese people's preference for gold is still very large and the demand for investment in gold is still strong. Therefore, if there are no effective measures to increase the supply of gold, the gap between domestic and international gold prices will likely continue in the near future.

Vietnam can study and learn from experiences from countries with similar conditions to gradually improve and innovate its gold market management methods more effectively.

The flow of money into gold shows no signs of stopping.

The world gold price once reached nearly 3,500 USD/ounce on April 22, 2025, but after the US and China made initial progress in trade negotiations, the price adjusted down to more than 3,200 USD/ounce. According to Mr. Shaokai Fan, such geopolitical and economic information can change continuously, making the cycle of gold price increase and decrease increasingly shorter and more unpredictable.

Mr. Nguyen Viet Duc - Digital Business Director, VPBank Securities Joint Stock Company (VPBankS) - warned that investing in gold at the present time has many potential risks, because the market often experiences strong corrections after hot increases.

However, many experts still assess the prospect of gold price increase in the medium and long term as very positive. Even when gold is under pressure to adjust, the decrease is usually not too deep because the buying pressure from large investment organizations is still waiting for the opportunity to disburse more.

Data from the World Gold Council shows that by the end of the first quarter of 2025, the total amount of gold held by ETFs had reached 552 tons - an increase of more than 170% over the same period last year and the highest level since the first quarter of 2022. Mr. Shaokai Fan commented that the cash flow into gold ETFs continued to increase in April 2025. Although it may decrease slightly in May due to the impact of trade negotiations, he believes that the general trend from now until the end of the year is still increasing capital flow into gold investment channels.

Currently, the total value of gold holdings in ETFs has reached $345 billion - the highest level in history. In addition, the demand for physical gold has also increased sharply globally, especially in regions such as the Middle East and China.

In the first quarter of 2025, China bought 124 tons of gold - the second highest quarterly figure in history, reflecting the shift of Chinese individual investors away from less attractive investment channels such as stocks and real estate.

Gold demand from central banks also remains high, with net purchases from this group estimated to exceed 1,000 tonnes by 2025. The central banks of Poland, China, Kazakhstan, and the Czech Republic have all been active buyers so far this year.

Notably, the Central Bank of Kazakhstan – which has often sold when gold prices rose in previous years – has announced that it will not sell but will continue to increase its gold reserves in the coming time.

Currently, gold only accounts for about 5-10% of the reserve asset portfolio of global central banks, meaning there is still a lot of room to continue increasing reserves, especially in the context of the USD and US government bonds remaining unstable.

Along with that, the world economic and political situation continues to evolve in a complex and unpredictable manner, creating additional support for gold prices.

Analysts say that demand for gold in the coming time will likely continue to increase strongly, becoming a key factor helping gold prices maintain high levels or continue their upward trend.

Source: https://baodaknong.vn/chenh-lech-gia-vang-kho-thu-hep-trong-ngan-han-252990.html