Gold ring prices remain high amid high demand, low supply

Recently 24k gold rings steadied at around VND78 million (US$3,070) per tael of 37.5 grams or 1.2 ounces, a historic peak established last Wednesday.

The rise caused people to flock to jewelry chains such as SJC, PNJ and DOJI to buy gold rings.

An SJC store on Nguyen Thi Minh Khai Street in HCMC’s District 3 had to add another counter for 24k rings and more seats to accommodate the rush.

Customers gathered in front of the SJC store's gold ring counter on Nguyen Thi Minh Khai Street, HCMC’s District 3, on the morning of April 15, 2024. Photo by VnExpress/Quynh Trang

But with supply of gold being low, SJC had to impose a limit of five taels per customer. A woman customer at the store said she had to visit the place three times to buy her desired quantity.

She said she was not worried when prices slipped. "Usually gold ring prices only fall by VND1 million at most while it can rise much faster than that."

Jewelry chain PNJ said there has been a change in consumer behavior from the past when 24k rings were bought as gifts. Now they are bought as an investment and to preserve wealth, it said.

This year gold has outperformed other asset classes like stocks and property, with rings appreciating by 22.3% and bullion by 14.8%.

Rings have the same purity as bullion but are not subject to monopolization and their prices are closer to global gold prices. Bullion was selling at around VND85 million last week.

Cao Thi Ngoc Dung, PNJ’s chairwoman, said her firm is having a hard time securing gold for production. "The challenge is to time our purchases so we can get reasonable prices. There are days when the factory has to temporarily halt production because the raw gold costs are too high."

As businesses are not allowed to import gold, the local market is their only source, she explained.

Customers queued up at the SJC store's gold ring counter on the morning of April 15, 2024. Photo by VnExpress/Quynh Trang

Many jewelers, especially smaller ones, often purchase gold without documents indicating origin to get good prices.This makes it hard for them when authorities come around to inspect, Nguyen Thanh Long, chairman of the Vietnam Gold Trading Association, said.

The central bank is intensifying inspections of jewelers and cracking down on smuggling, he said.

So many businesses have stopped or reduced gold purchases, which has resulted in lower jewelry production, he added.

In fact, many jewelry stores have shuttered temporarily in HCMC in the last two weeks as authorities began an inspection.

This would affect large chains as well because smaller stores are one of their few sources of gold, PNJ’s Dung said.

The Vietnam Gold Trading Association has urged the central bank to grant licenses to import gold, but it has yet to do so.

Until the gold shortage is resolved, experts said 24k rings would remain in short supply, and their prices would remain high.