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Maintain reasonable gold investment ratio

HA (according to Vietnam+) 26/01/2025 - 19:49

The domestic gold market has just had a quite active trading week before entering the Lunar New Year holiday.

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Illustration photo: Minh Quyet/VNA

Experts predict that the domestic gold market will likely continue to increase after the Tet holiday. However, will investing in gold still be as profitable as last year?

Expectations to increase after Tet holiday

Collecting her husband's salary and Tet bonus, Ms. Phuong Hoa, in Binh Thanh District, Ho Chi Minh City, took the opportunity to buy 8 taels of gold rings right before the Lunar New Year holiday. Although the price of gold at this time is no longer attractive, this woman believes that with the development of gold prices in 2024 and recent fluctuations in the international market, the price of gold will continue to increase in the coming time.

"Over the years, I have seen that domestic gold prices often increase significantly during the God of Wealth festival. Therefore, I am not worried that buying and holding at this time will result in losses," said Ms. Hoa.

Not only Ms. Phuong Hoa, many people have the habit of saving their salary and Tet bonus to buy gold before Tet, causing gold trading centers to be bustling in recent days.

The domestic gold market actually recorded a rather active trading week before the Lunar New Year holiday. The price of SJC gold bars and gold rings at stores and business centers was continuously adjusted upward, recording an increase of more than VND2 million/tael compared to the previous week. Experts predict that the domestic gold market will likely continue to increase after the Tet holiday.

Looking back at 2024, the gold market has had a very "sparkling" year. According to data from the World Gold Council, gold has performed exceptionally well in 2024, rising 25.5% since 2010. This increase can be explained by the fact that gold acts as an effective hedge against increased geopolitical uncertainty and market volatility.

Domestically, at the beginning of 2024, the price of gold rings was only 63 million VND/tael, by mid-May 2024, gold peaked at 92.4 million VND/tael. The strong fluctuations in gold prices immediately attracted the attention of investors.

Statistics from the Fmarket Investment Platform show that the number of investors buying DOJI physical gold on Fmarket increased dramatically in 2024. Last year, gold rings recorded an increase of 34%, far exceeding other investment channels such as savings, stocks, etc. Meanwhile, SJC gold bars increased more modestly at 14%.

Entering 2025, gold prices are expected to continue to fluctuate strongly, especially related to economic policies after Donald Trump takes office as US President.

According to Shaokai Fan, regional director for Asia-Pacific (excluding China) and global head of central banks at the World Gold Council, the market consensus forecasts that gold's performance in 2025 will be more modest, but there are likely to be bullish catalysts as the new year begins.

In the long term, Mr. Heng Koon How, Head of Market Strategy, Global Economics and Market Research, UOB Bank (Singapore), said that the positive drivers supporting gold prices remain intact. This includes the continued gold allocation from emerging markets and Asian central banks, as well as strong physical gold and jewelry demand from the retail sector.

UOB experts maintain a positive view on gold, as long-term safe-haven demand is likely to remain strong amid rising geopolitical and economic risks from the new US President; at the same time, forecast gold to rise to $3,000/ounce by the end of 2025.

Experts say that the US Federal Reserve's (Fed) slowing down of interest rate cuts could reduce demand for gold investment from ETFs. Gold price forecasts are therefore still subject to many unpredictable variables. The upward trend in gold prices is expected to continue this year, but at a more modest pace than in 2024.

Maintain reasonable investment ratio

The fact that gold has outperformed many major assets does not mean that investing in gold will be effective for investors.

The performance of investment channels recently announced by Dragon Capital shows that gold is ranked at the lowest level compared to stocks, real estate and corporate bonds, reaching only 2-2.5 points on a scale of 5.

Mr. Le Anh Tuan, Director of Investment Division of Dragon Capital, said that gold prices often fluctuate unpredictably and actual performance is not as high as expected. In terms of speculation, gold is closely monitored by the State Bank to stabilize exchange rates and control the market.

This expert also said that he himself only keeps 2% of his portfolio in gold, because this is not a channel that brings outstanding performance in the long term.

Dragon Capital’s data from 2001-2022 shows that gold only achieves an average return of 9%/year, the second lowest after foreign currencies. Gold prices have times of very strong increases, but in the long term of 10, 20 or even 50 years, gold cannot compete with investment channels such as stocks or real estate.

Moreover, gold investment mainly relies on capital gains from the difference between buying and selling prices, while not generating a stable profit stream. At many times, the domestic gold price has a large difference compared to the international market, causing investors to face more risks when participating in this market.

Mr. Bui Van Huy, Director of Investment Research & Analysis at FIDT, also said that in most cases, only 5-10% of total assets should be allocated to gold to diversify risks. Investors should adjust the proportion when there are fluctuations and absolutely do not buy gold bars if the price difference is too high compared to the world gold price.

Dr. Nguyen Tri Hieu, a financial expert, said that investing in gold in 2025 will no longer be as "profitable" as last year, in terms of both profitability and liquidity.

According to him, the gold bar market is under the management of the State Bank; while gold rings, although not controlled, are still difficult to buy and sell at times, and the price is sometimes even higher than that of gold bars. Not to mention, the domestic gold price is linked to the world gold price, although it has been adjusted, there is still a significant difference.

Experts say that if people have idle money, they can invest in gold, but they should not "put all their eggs in one basket" but should allocate it to different investment channels such as savings, stocks, real estate, etc. In particular, they should not use leverage in gold investment. This will help investors avoid the risk of loss as well as optimize profits, especially in the context of the financial market being forecasted to have many unpredictable fluctuations.

HA (according to Vietnam+)
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Maintain reasonable gold investment ratio