Eliminate monopoly, open import: Will gold price fall below 100 million VND/tael?

The State Bank may grant licenses to banks and businesses to import raw gold and produce gold bars. Gold prices are under great pressure, but will they fall below the threshold of 100 million VND/tael?

A representative of the State Bank (SBV) has just shared with the media that, with the new mechanism in the draft Decree amending Decree 24, the market will have more gold bar brands produced by enterprises and banks licensed by the SBV.

This is considered a major step towards a planned marketization, accompanied by a strict control mechanism, eliminating the State monopoly in the production of gold bars and the import of raw gold to produce gold bars.

Gold prices are under great pressure. The question is whether the price can fall below the threshold of 100 million VND/tael?

As of 8:30 p.m. on June 11 (Vietnam time), the spot gold price on the international market was at 3,340 USD/ounce, converted to the bank USD price of 106.5 million VND/tael, including taxes and fees, about 12.3 million VND/tael lower than the domestic gold price as of the end of the afternoon session on June 11.

World gold prices are under pressure to take profits even though the world continues to witness increasing instability, from the conflict in Ukraine, tensions in the Middle East to protests in many places in the US.

Quant Mutual Fund recently commented that in the short term, gold prices could correct sharply, losing 12-15% in the next 2 months.

At the current price, if it loses 15%, the gold price could fall to $2,840/ounce (equivalent to VND90.5 million/tael).

Gold prices are forecast to have difficulty breaking through like in the first 4 months of 2025. Photo: HH

Strategist David Sekera from Morningstar even said at the end of March that gold prices could fall to around $1,820/ounce (equivalent to VND58 million/tael) in the next 4-5 years, equal to October 2023.

David Sekera explains that the current record high gold price will encourage producers to increase gold mining. Higher supply will put downward pressure on prices in the coming years.

Gold mining has become more profitable in recent years, with the average profit margin for gold miners expected to reach $950 an ounce by the second quarter of 2024, the most profitable mining period since 2012, according to data from the World Gold Council (WGC).

Sekera analyzed that the factors that led to higher gold prices are starting to weaken, including real interest rates in the US. Real interest rates are forecast to be higher in 2026. Meanwhile, US inflation by the end of 2025 is forecast to fall to the US Federal Reserve's 2% target.

“The cure for high prices is high prices,” Sekera said. Gold has rallied strongly in late 2023, all of 2024, and the first four months of 2025.

Demand for gold will weaken. The world will see a “substitution effect” in the coming years, both in the areas of gold used in jewelry and in industry.

On the supply side, Sekera expects new mines to come into production, although he said “it could take a few years” for these mines to come online and for new reserves to be built.

In the country, if the State Bank of Vietnam grants licenses to businesses and banks to import raw gold and produce gold bars, the gap between domestic and international gold prices could be narrowed. If the world gold price falls to 2,840 USD/ounce (equivalent to 90.5 million VND/tael) in the next 2 months, as forecast by Quant Mutual Fund, the domestic price of SJC gold bars and gold rings could also fall below 100 million VND/tael.

However, the world and domestic gold prices are forecast to fluctuate, depending on supply and demand. In recent years, central banks of many countries have increased gold purchases to reduce dependence on the USD.

Domestic gold supply also depends on gold import quotas, tax policies and related fees. Exchange rates, foreign exchange reserves... are also factors that can affect many markets, including the commodity market.

Most major organizations in the world predict that the international gold price will continue to increase, although the increase is not expected to be as strong as in the past two years. The downward adjustment may only be short-term.

Goldman Sachs predicts gold will reach $3,700 an ounce by the end of 2025. JP Morgan also gives a similar figure. Bank of America (BofA) believes gold could surpass $4,000 an ounce by early 2026. A 10-15% increase over the next year or so.

Source: https://vietnamnet.vn/xoa-doc-quyen-mo-cua-nhap-khau-gia-vang-co-ve-duoi-100-trieu-dong-luong-2410616.html