Strange developments in gold jewelry

Unlike the bustling scene of previous years, jewelry stores in Ho Chi Minh City are now quite deserted, with few shoppers.

Dozens of gold shops closed

On the afternoon of January 7, according to a reporter from Nguoi Lao Dong Newspaper in the An Dong market area, many gold shops around An Duong Vuong and Nguyen Duy Duong streets (District 5, Ho Chi Minh City) were open for business but were quite deserted. An employee of a gold shop on An Duong Vuong Street said that the shop was still open for business as usual but purchasing power was very slow.

Customers mainly come to exchange gold jewelry such as earrings, rings, bracelets, and necklaces, while buying new ones is rare. "Customers who exchange gold jewelry will mainly lose money, while buying new gold because the price is high, so there are fewer transactions," said an employee of this gold shop.

Deserted scene at the gold jewelry selling area at An Dong market (District 5, Ho Chi Minh City). Photo: LAM GIANG

The owner of another gold shop in An Dong market (District 5) said that from morning until early this morning, her shop had only one customer coming to buy a necklace. A few customers a day is already a lot. "Due to the economic impact, the demand for gold jewelry is not as high as in previous years. My shop only sells gold jewelry, not plain gold rings, so there are even fewer customers," said the owner of this gold shop.

In many other areas in Ho Chi Minh City such as the gold street at Ben Thanh market, along Le Thanh Ton street, Tan Dinh market, Ba Chieu market... the scene has been deserted for many days. According to the reporter's observation, most of the employees and gold shop owners are sitting waiting for customers.

Mr. Nguyen Van Dung, Chairman of the Ho Chi Minh City Jewelry Association (SJA), acknowledged that in many years, the domestic gold market has never witnessed such a gloomy and quiet scene.

SJA does not have specific statistics on the number of gold shops that have temporarily stopped operating, but a preliminary survey of some gold shops in districts 1, 3, and 5 shows that there are about 20 shops that are closed. This number is not much compared to thousands of gold shops in Ho Chi Minh City, but it is a strange development at the end of the year, which is the time when the demand for buying and selling gold jewelry is bustling.

"Many establishments producing and trading in gold jewelry and fine arts face difficulties with raw gold. When buying gold, they must prove its origin and meet requirements for invoices and documents.

"The lack of raw gold has also made it difficult to produce gold jewelry. Due to low purchasing power, many gold shops have temporarily stopped operating. We have also sent a petition to the State Bank to allow businesses to import raw gold to produce gold jewelry and fine arts, but have not received a response yet," said Mr. Nguyen Van Dung.

Quenching the thirst for raw gold

Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Trading Association (VGTA), informed that in order to have raw materials to make gold jewelry to serve the Tet market, some businesses have to collect gold rings from people at high prices, leading to the price of gold rings and gold jewelry increasing rapidly and being higher than SJC gold bars. In addition, the price of gold jewelry is too high, causing purchasing power in the gold market to decrease.

In fact, the price of gold rings at companies such as SJC, PNJ, DOJI is traded at around 83.8 million VND/tael for buying and 85.1 million VND/tael for selling. Meanwhile, some gold shops quote the price of gold rings at a higher level, around 86.5 million VND/tael. Therefore, Mr. Huynh Trung Khanh hopes that Decree 24/2012/ND-CP on gold market management will soon be amended, allowing businesses to have gold raw materials to produce jewelry.

For businesses, a representative of Phu Nhuan Jewelry Company (PNJ) said that despite difficulties in purchasing raw gold, PNJ can still maintain inventory at a safe level to meet the peak season from the fourth quarter of 2024 to the first quarter of 2025. In particular, PNJ focuses on its main business segment of jewelry by launching special collections for Spring - God of Wealth, 24K gold jewelry products to pray for good fortune at the beginning of the year.

"All have been upgraded and improved a lot in terms of design, models, applying advanced production technology to produce products with high aesthetics but using less gold materials. PNJ also recycles inventory products to renew the product life cycle" - the company representative presented the solution.

Responding to a question from a reporter from Nguoi Lao Dong Newspaper about the proposal to import raw gold to produce gold jewelry and fine arts, Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City Branch, said that he had received feedback from local businesses and had forwarded the proposal to the State Bank during the process of amending Decree 24. The State Bank of Vietnam also stated its view that it would amend the decree in a way that would create favorable conditions for the gold market to stabilize, develop sustainably and support businesses.

Mr. Dao Xuan Tuan, Director of the State Bank of Vietnam's Foreign Exchange Management Department, informed that the State Bank of Vietnam has submitted to the Government a summary assessment of Decree 24 in the direction of reducing the impact of management agencies on the gold market.

Deputy Governor of the State Bank of Vietnam Dao Minh Tu said that after management and operation solutions in 2024, the gold market has initially achieved the goal of reducing the price of SJC gold bars from a difference of up to VND 20 million compared to the world price to VND 3-4 million/tael at present. The price of gold bars also fluctuated similarly to the price of 99.99 gold rings.

"Currently, the State Bank of Vietnam is continuing to consider how to operate and manage the gold market, including the direction of amending Decree 24 in the direction of ensuring people's rights in buying, selling, and storing gold bars, and considering this an important task of the industry," said Deputy Governor Dao Minh Tu.

Should I buy gold now?

At the end of January 7, SJC gold bars were traded by businesses at around VND83.8 million/tael for buying and VND85.3 million/tael for selling, down VND200,000/tael compared to the previous day. The price of plain gold rings and jewelry of all kinds was traded at VND83.8 million/tael for buying and VND85.1 million/tael for selling.

According to gold expert Tran Duy Phuong, the world gold price may increase to 2,800 - 2,900 USD/ounce but it is very difficult to reach the 3,000 USD/ounce mark this year. Because the precious metal has had a very strong breakthrough year, the time of reaching a historical peak of nearly USD/ounce (up about 40%) compared to the previous year and closing 2024 with an increase of about 30% are already very high milestones.

Domestic gold prices increase faster than the world due to the increasing demand of people to buy gold to save and accumulate at the end of the year in Vietnam in particular, and in Asian countries such as China and India. At the same time, domestic supply is scarce, not enough raw materials for businesses to produce gold rings and jewelry of all kinds. Buying according to demand, which can be 5-10 taels of 99.99 plain gold rings, is not easy. Even though the supply of SJC gold bars is not lacking, people still have to register online and each person can buy a maximum of 1 tael/time.

"In the current economic context, the demand for SJC gold bars and gold rings on the occasion of God of Wealth will not be too sudden. If people buy, it will only be for good luck at the beginning of the year, it is difficult to queue or buy gold in large quantities. Especially, SJC gold bars are still being strictly controlled by the State Bank of Vietnam in terms of price to maintain a difference not too far from the world gold price. In case the world gold price decreases or remains stable around 2,700 USD/ounce, the domestic gold price will also find it difficult to break out" - expert Tran Duy Phuong said.

Source: https://nld.com.vn/dien-bien-la-cua-vang-trang-suc-196250107204659203.htm