October 15, 2019 21:28

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Gold price is still 'dancing' in 2019

09:26 | 16/02/2019

VCN- Economist Ngo Tri Long said that the current gold price is difficult to predict because this is not a normal commodity but depends on the economic and political situation such as: Oil price, USD price, trade war, investment situation...

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Gold price is expected to fluctuate. Photo: H.Diu

Still a safe "shelter"

In the last days of 2018, gold prices had a strong increase when reaching the "peak" level for more than 8 months. Therefore, in the early days of the New Year of 2019, SJC gold price in the country was around VND 37 million per tael, increasing nearly by VND 100,000/ tael in both directions of buying and selling. This difference is making selling price higher than the purchase price by about 250,000 VND/ tael. On the world market, spot gold price is currently at over $US 1,310 / ounce, slightly increasing compared to the previous trading session and remaining at a high level. Calculated under the USD exchange rate at banks, the world gold price is equivalent to over 36.6 million VND/ tael, lower than SJC price by nearly 600,000 VND/ tael.

Going back to the gold price movement in 2018, we can see the excitement when the price sometimes reached its highest level of over $US 1,320/ ounce, but sometimes dropped to the lowest level of over $US 1,180/ ounce. Thus, compared to the beginning of 2018, the world gold price decreased by 2.9%, equivalent to about $US 40/ ounce. However, in the first month of 2019, the gold price increased again due to the influence of many factors.

It can be seen that the current world economic situation is experiencing unpredictable changes, the economy from the beginning of the year has had many unexpected movements. Typically, the US Federal Reserve (FED) continuously raised interest rates on the US dollar, but now it signals that it will halt raising interest rates and be flexible in selling assets. Besides, political trade crises have weakened the dollar and many foreign currencies; The stock market has dropped sharply in many sessions... These instability signs have made investors believe that in 2019, gold continues to be a safe “shelter”. International experts are concerned, if eventually there is another closure of the US Government, the price of gold will skyrocket, because when the first closure took place, gold price reached a new high.

According to economist Ngo Tri Long, currently, price of gold is difficult to predict because it is not a normal commodity but depends on the world economic and political situation such as: Oil price, USD price, trade war, investment situation... However, with the current fluctuations, especially the tension of trade wars, the most prominent being the trade war between the US and China, gold prices in 2019 will increase or decrease by over $US 1.300/ ounce. "The trade war is going to be stressful and will cause the economy to be affected, foreign currencies may weaken, making gold a safe shelter. Demand and supply increases makes prices grow, but there will be no strong fluctuations, only ups and downs like previous years,” said Mr. Ngo Tri Long.

Is it the safest solution?

For a long time, Vietnamese people have saved money to buy gold to save and store as an asset. In particular, this is true at the beginning of the year after the Lunar New Year. Because after the Tet holiday, people often save a sum of money, so they want to buy gold, just to store and to get lucky at the beginning of the year. So in the near future, on the 10th of the lunar calendar (February 14) - the day of the God of Fortune, people rush to queue for buying gold, causing the domestic gold price to soar.

However, recently, the above situation is only seasonal, with the meaning of getting good luck. Because of the fact that the domestic gold price has increased slightly, gold is only a tool to preserve assets, profitability is less compared to depositing savings or securities investment. Mr. Ngo Tri Long said that this rule of gold being a profitable investment was no longer true because gold price did not increase strongly. Moreover, the domestic gold price depends on the world gold price because Vietnam cannot produce gold, so gold buyers are at risk, such as with fake gold, low quality gold, anti-gold policies of the State, and difference between domestic and world prices.

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Evaluating the gold market in 2018, the State Bank said, the domestic gold market has been stable and fluctuated in a narrow range in the context of complicated international gold prices. In 2019, it will continue to implement effective foreign currency market and gold market management solutions; actively implementing measures to limit the dollarization and goldization. Therefore, people can trust that the gold trading business in the market is smooth, stable, and legal rights of people are ensured and protected. However, with unpredictable developments of the gold prices, the people and investors need to be cautious, do not "put all eggs in a basket" to prevent risks.

By Huong Diu/ Kieu Oanh