Gold prices might fall further: analysts advise caution

The four state-owned banks and Saigon Jewelry Company stores are full of prospective gold buyers these days as people queue for hours amid a decline in prices.

SJC-branded bullion has fallen by 17% since its historic peak on May 10 and now trades at VND76.98 million per tael (US$3,027), a four-month low.

Thuc of HCMC’s District 1 waited 30 minutes Wednesday afternoon at a branch of BIDV but still could not get a token due to the long queue.

"I am spending my savings on gold to ensure security."

Analysts say people are rushing to buy gold because of a lack of other investment options.

Nguyen An Huy, an investment consultant at asset management firm FIDT, said the property market is still struggling to recover, investors have not regained confidence in the bond market and the stock market is rising slowly.

People are therefore turning to gold as its prices had been surging until last month, but buying due to fear of missing out might result in losses, he told VnExpress.

CEO of state-owned gold distributor SJC Le Thuy Hang also advised investors to be cautious about buying gold now as prices might fall further.

She said the central bank wants to bring domestic gold prices down to the same level as global rates and therefore investors should expect more declines. "People should wait a few more sessions for prices to stabilize before buying."

The domestic price is now 5.5% higher, with the gap narrowing from 23% a few weeks ago.

Dao Xuan Tan, head of the State Bank of Vietnam’s foreign currency management department, also forecast a decline in prices.

"People should be cautious as global prices are volatile."

The central bank on Friday has dismissed rumors of a gold shortage, asserting that there is sufficient supply to meet legitimate demand. In a statement, it emphasized its resources and determination to stabilize prices and narrow the gap between domestic and international rates.

Jim Wyckoff, a senior analyst at Canadian gold trading company Kitco, said the market remains optimistic that the U.S. would cut interest rates this year, and this is the biggest support for precious metal prices.

Huy advised investors to buy pure gold rings if they remained VND3 million cheaper than bullion.

Investors should keep 5-10% of their portfolio in gold, he said.

"Gold is extremely unpredictable in the short term as it depends on uncontrollable factors such as interest rates and geopolitical developments."