The State Bank of Vietnam (SBV) may soon issue licenses for banks and businesses to import raw gold and produce gold bullion. As the market shifts under mounting pressure, the question is: could domestic gold prices drop below 100 million VND per tael?

A representative from the SBV recently shared with the media that under the proposed amendments to Decree 24, a new mechanism would allow the introduction of multiple bullion brands produced by licensed enterprises and banks.

This move marks a significant shift toward a more market-oriented approach, while maintaining tight regulatory oversight. It aims to eliminate the state monopoly on gold bullion production and raw gold importation.

Currently, gold prices are facing substantial downward pressure. The key question is whether prices could realistically fall below 100 million VND (approximately $3,930) per tael.

As of 8:30 p.m. (Vietnam time) on June 11, spot gold on the international market traded at $3,340 per ounce. After conversion and factoring in bank exchange rates, taxes, and fees, this equates to about 106.5 million VND per tael, roughly 12.3 million VND higher than domestic gold prices by the end of the trading day on June 11.

Despite ongoing global instability - from the war in Ukraine and tensions in the Middle East to widespread protests in the U.S. - the international gold market is currently under profit-taking pressure.

Quant Mutual Fund recently projected that gold prices may decline sharply in the short term, losing 12-15% over the next two months. Based on current rates, a 15% drop would bring gold down to around $2,840 per ounce, equivalent to approximately 90.5 million VND ($3,560) per tael.

In a more long-term view, David Sekera, a strategist at Morningstar, predicted in late March that gold could drop to about $1,820 per ounce (roughly 58 million VND or $2,280 per tael) over the next 4–5 years, similar to levels last seen in October 2023.

Sekera explained that record-high prices are encouraging producers to ramp up output, increasing supply and exerting downward pressure in the years ahead.

According to data from the World Gold Council (WGC), gold mining has become increasingly profitable in recent years. In Q2 2024, the average profit margin for gold mining companies reached $950 per ounce - the highest since 2012.

Sekera also noted that the factors driving gold prices upward are beginning to fade, including U.S. real interest rates, which are expected to rise by 2026. Meanwhile, inflation in the U.S. is projected to return to the Federal Reserve’s 2% target by the end of 2025.

As Sekera put it, “the cure for high prices is high prices.” Gold prices surged sharply at the end of 2023 and continued to rise throughout 2024 and into early 2025.

Gold demand is expected to ease, with a “substitution effect” anticipated in coming years, affecting both jewelry and industrial applications.

On the supply side, Sekera believes new gold mines will gradually come online, though it may take several years to fully develop these new sources.

Domestically, if the SBV approves the importation of raw gold and authorizes banks and enterprises to produce bullion, the current gap between international and domestic gold prices could narrow significantly. If global gold prices fall to around $2,840 per ounce (90.5 million VND per tael) in the next two months, as predicted by Quant Mutual Fund, then SJC gold bullion and gold jewelry prices in Vietnam could realistically dip below the 100 million VND mark.

Still, gold prices - both globally and in Vietnam - are expected to remain volatile, driven by supply and demand dynamics. In recent years, central banks worldwide have increased their gold purchases to reduce reliance on the U.S. dollar.

Domestic gold supply is also affected by import quotas, tax policies, and related fees. Exchange rates and foreign reserve levels are other crucial factors influencing the broader commodities market.

While several global financial institutions anticipate continued upward momentum in gold prices, the expected rate of increase is likely to be more moderate than the explosive growth seen over the past two years. Any near-term declines are expected to be temporary.

Goldman Sachs forecasts gold could reach $3,700 per ounce by the end of 2025. J.P. Morgan issued a similar projection, while Bank of America (BofA) expects gold to surpass $4,000 per ounce by early 2026 - an increase of 10–15% over the next year.

Manh Ha