Developing alternative products to balance supply and demand in the gold market

Regarding the "galloping" increase in gold prices, reporters from Hai Phong Newspaper, Radio and Television interviewed Dr. To Van Tuan, Head of Finance - Banking Department, Faculty of Management - Finance, Vietnam Maritime University.

Dr. To Van Tuan, Head of Finance - Banking Department, Faculty of Management - Finance, Vietnam Maritime University.

- Gold is continuously conquering new price peaks at this time. On August 30, SJC gold bars were bought at around 129 million VND/tael and sold at over 130 million VND/tael. How do you explain the reason for this increase?

- In my opinion, there are two main groups of reasons for the current "skyrocketing" gold price. First of all, due to the unstable global economic and geopolitical context, President Donald Trump continues to put pressure on the US Federal Reserve (FED) to reduce interest rates. When interest rates are low, the attractiveness of USD assets (such as US government bonds) is reduced, making them less attractive in the eyes of international investors. Capital flows tend to flow out of the USD, putting pressure on the USD to weaken, leading investors to switch to investing in gold.

US President Donald Trump's announcement of tariffs of 25-40% on 14 countries, effective from August 1, 2025, has caused global trade instability. Meanwhile, central banks of many countries have been buying gold reserves to diversify assets, replacing the USD. This is an important driving force for the continuous increase in international gold prices.

For Vietnam, the domestic gold management mechanism still has many shortcomings. In the past 10 years, the gold bar market has been almost exclusively produced and imported, controlled by the State Bank (SJC brand). Limited supply, while demand is high, leads to a large difference in domestic gold prices compared to world gold prices.

Vietnamese people have a habit of hoarding gold, especially when inflation, real estate and stocks are volatile. At the same time, when the price of gold increases, speculative money flows in, creating a “self-fulfilling prophecy” effect (the higher the price, the more people buy). In particular, with the traditional culture of considering gold as a safe and highly liquid asset, this trend is further reinforced.

Alternative financial instruments for gold (such as gold ETFs and domestic gold futures contracts) have not been developed, leading to people and businesses having almost only the option of buying and selling physical gold. This has increased the imbalance between supply and demand and pushed the gold market into a state of strong speculation.

Customers transact at a gold store of DOJI Gold and Gemstone Group, on Cau Dat Street, Gia Vien Ward. Photo: TRUNG KIEN

- What do you think about the impact of the sharp increase in gold prices on people's lives and the economy?

- The increase in gold prices has a great impact on people's lives. For those who hoard gold, especially gold rings, the increase in gold prices can help them protect their assets from inflation and increase their accumulated value. However, they may also face the risk of loss if the gold price suddenly drops. On the consumer side, the increase in gold prices can lead to concerns about the value of money, putting pressure on low- and middle-income people to protect the value of their assets. If many people rush to buy gold, this can reduce the purchasing power of other goods.

As for the economy, the increase in gold prices can cause a "bleeding" of capital from production and business sectors to safe investment channels such as gold. This reduces investment in production, affecting economic growth. If many people rush to buy gold instead of depositing money in banks, banks may lack money to lend, reducing liquidity in the financial system. A sharp increase in gold prices can affect exchange rates and interest rates, increase borrowing costs and affect international trade. In general, if the gold fever persists, it will have a negative impact on the economy, causing instability in investment and consumption, complicating the Government's monetary policies.

- In your opinion, can the State's breaking of the monopoly on gold bars control the escalating price of gold?

- On August 26, 2025, the Government issued Decree No. 232/2025/ND-CP amending and supplementing a number of articles of Decree No. 24/2012/ND-CP on the management of gold trading activities. The Government has abolished Clause 3, Article 4 of Decree No. 24/2012/ND-CP, which states that "The State has a monopoly on the production of gold bars, the export of raw gold, and the import of raw gold for the production of gold bars".

The State's breaking of the gold bar monopoly can help curb the escalating gold price by increasing legal supply, creating competition among businesses and helping domestic prices get closer to world prices, thereby reducing scarcity and limiting excessive speculation.

However, this is not a radical solution, because the habit of hoarding gold is still very common, while fluctuations in international gold prices always directly affect the domestic market. In addition, opening the door for many businesses to participate in gold production and import also requires a strict management mechanism to prevent trade fraud and gold smuggling.

Therefore, breaking the gold bar monopoly should only be considered as part of a comprehensive set of solutions, combined with macroeconomic stability, inflation control, increasing confidence in the domestic currency and developing new gold substitutes that can create sustainable impacts.

More importantly, it is necessary to link gold market reform with long-term orientation in monetary policy, to both ensure the interests of people and businesses and maintain national financial and monetary stability.

- From your perspective, what measures should regulators take right now to cool down gold prices?

- In my opinion, the management agencies need to urgently grant licenses to qualified enterprises to import raw gold and participate in the production of gold bars, in order to supplement the legal supply for the market. At the same time, the State Bank can proactively conduct auctions or sell gold bars directly with appropriate volumes to intervene promptly when the market experiences unusual fluctuations.

The management agency needs to complete the legal framework and standardize gold trading activities; orient the development of a gold trading floor according to international standards, directly linked to the world gold price. This will be an important tool to form an official, transparent and public reference price, at the same time limit speculation and price manipulation, thereby gradually linking the domestic gold market with international practices.

To ensure market discipline, authorities need to tighten inspection and control and strictly handle all violations of the law in the gold trading sector. In addition, encourage the development of alternative financial products such as gold certificates, futures contracts and gold ETFs, helping people diversify their investment options and reduce the pressure of holding physical gold.

Thank you very much!

AN PHUC

Source: https://baohaiphong.vn/phat-trien-cac-san-pham-thay-the-de-can-doi-cung-cau-thi-truong-vang-519601.html