Gold prices touch new heights

(ĐTTCO) - Last week when world gold prices exceeded USD 1,800 per oz. and almost touched USD 1,810 per oz. investors showed a serious interest. Similarly, investors were drawn when the domestic SJC gold bar exceeded VND 50 mn per tael, setting a new record. Saigon Investment spoke with Mr. Tran Thanh Hai, Chairman of the Vietnam Gold Investment and Trading JSC (VGB), for his opinion on this issue.

Gold prices touch new heights

D 1,810 per oz. investors showed a serious interest. Similarly, investors were drawn when the domestic SJC gold bar exceeded VND 50 mn per tael, setting a new record. Saigon Investment spoke with Mr. Tran Thanh Hai, Chairman of the Vietnam Gold Investment and Trading JSC (VGB), for his opinion on this issue.

JOURNALIST: - Sir, world gold price last week exceeded USD 1,800 per oz. and domestic gold price was at VND 50 mn per tael. What do you think of this development?

Mr. TRAN THANH HAI: - Following the rise in world gold price and breaking through the technical barriers of USD 1,788 per oz. and going from USD 1,800 per oz. to USD 1,808 and USD 1,810 per oz., domestic gold price was gradually able to reach the milestone of VND 51 mn per tael. Thus, domestic gold has surpassed the psychological resistance of VND 50 mn per tael. In September and October 2011, the price of gold was around VND 49 mn per tael within only a few hours, then went down for nearly ten years from 2011 to 2020. Since then, the price of gold has never stepped over VND 49.5 mn per tael. So since the beginning of last week, it can be said that SJC gold price is at a new price level.

However, the above price is underpinned by many factors. Firstly, the world gold price is at a high and in an uptrend, because the Covid-19 pandemic has not yet been controlled and the world has no preventive vaccine so far. Secondly, the US economy is still reeling under the Covid-19 pandemic. Thirdly, the US-China conflict, and the US-North Korea conflict are still smoldering. Fourthly, as I said, the price of gold has surpassed the psychological level if compared with the price of VND 49 mn in September and October 2011, and VND 50 mn per tael that has been stable for many days in a row. Fifthly, world gold prices and SJC gold prices are approaching parallel to each other. This is different from September and October 2011, when SJC gold price was higher than the world gold price by around VND 3 mn per tael, which means that there is no chance for gold to return to its previous price.

- Sir, how much do you expect gold prices to rise?

- Gold price reached USD 1,810 per oz. and it is likely that gold price will test resistance levels of USD 1,825 per oz. and USD 1,850 per oz. before approaching USD 1,900 per oz. With such strong barriers, gold price will form a new price zone and domestic gold price will certainly follow. Observing from the beginning of July, SJC gold price has followed closely with the world gold price and there is absolutely no difference. In the short-term scenario, I see that gold prices are currently in a bull run. In addition, consolidation of world and domestic gold prices has many other causes.

Although the world stocks are still green, the Dow Jones is still around 26,000 points, and the VN Index is above 800 points, but I can affirm that the current stocks may be showing a deceptive outlook. Currently, enterprises are facing a lot of difficulties, GDP growth is not as expected, CPI is rising again, and business investment by enterprises in the third quarter is challenging. A number of businesses in key industries such as wood, leather shoes are laying off workers, some seafood products still have no output, and the tourism and aviation industries are facing extreme difficulties. However, stocks remain green, which could be due to belief that stocks will reverse. Therefore, international and Vietnamese investors are gradually transferring part of their investment assets from stock markets to gold or real estate.

- In the short-term scenario the price of gold will increase, so will there be any barriers in the long-term?

- Regarding barrier to gold prices, I think that by September and October, gold prices may fall because at that time it will be close to the US Presidential election. Certainly the president in power will find ways to revive the economy and when the economy is revived, it will push up green stocks, and  investors will withdraw money from gold channel into the stock channel. Thus, this drag that make gold prices turn around, which may appear on election day of the US President, between 3 November to 11 November. Another barrier is the discovery of the Covid-19 pandemic vaccine. If any country makes an anti-Covid-19 vaccine that will pass the World Health Organization effectively, then the price of gold will turn around. These are the two scenarios that can affect gold prices.

- Sir, how do you assess the evolution of the domestic market with the record increase momentum of gold prices in the past week?

-  According to my observation, the trading situation in the market is still at an average level, with a slight increase in gold trading enterprises. These businesses quickly grasp the price of gold, which is becoming the main driver because they operate under a market mechanism to stay afloat. Currently, the State Bank of Vietnam does not have a policy of selling or processing gold bars to prevent goldization, so gold fluctuates according to market supply and demand, and the domestic gold price close to the world gold price is obvious. I think that the price of gold has surpassed the psychological level, so trading is exciting in gold trading businesses, and to some extent affects a large portion of individual investors who are moving their assets from other investment channels.

- What can you share with investors and people about the excitement felt in gold prices?

-  There are many opinions that see a risk in the high price of gold, but in fact the more risky, the higher the price. Previously, gold borrowers could buy at VND 49.5 mn per tael to pay debt, now it takes more than VND 1 mn per tael, making many gold borrowers depressed. Back to the question, I think that gold is not currently a means of storage, because gold is on the top, if stored there may be risk of two factors that can turn around the price as analyzed above. However, gold is an attractive investment tool in July and August with quite high profit margins.

- Thank you very much.

Yen Lam (Interviewer)

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