What message is gold price sending?

In recent days, the market has witnessed the rise of a rising star. That is gold.

Looking at the chart, the price of gold has been increasing gradually since mid-August 2023. By early November, gold had a price drop after conquering the 70 million VND/tael mark of SJC gold. Then, this precious metal has been in a continuous upward trend for over 50 days, continuously breaking record prices. By December 26, the price of gold had exceeded 80 million VND/tael.

The reason for the increase in gold prices is assessed by international analysts as the bank interest rates are decreasing. Government bond yields are also decreasing. Currently and in the near future, the world economy continues to face difficulties. When the economy is in difficulty, stock profits are not high or non-existent, and finding investment stocks on the stock market is also difficult.

Gold ultimately acts as a hedge against economic risk and fear in investment channels globally.

Some analysts also believe that next year's US presidential election in November, the possibility of a fierce campaign between President Joe Biden and Republican opponent Donald Trump, and the presence of political instability could create additional momentum for gold prices.

Similar problems are also occurring in Vietnam. Bank interest rates have fallen sharply in recent times and are now at rock bottom, through the bottom. The real estate market has been “frozen” for a long time. The stock market is struggling after a deep decline last year.

Money flows into precious metals, especially gold, as a haven because for investors, money in safes not only does not generate profit but also depreciates. The steady increase in global gold prices could be a sign that the world economy will continue to face difficulties, at least in 2024. When the economy is in difficulty, governments are forced to find ways to push money out, which is the basis for maintaining low interest rates and thus drawing money into banks is no longer necessary. Economic difficulties also lead to less investment cash flow into projects, businesses, bonds, and stocks. The above factors all support the increase in gold prices.

But anything that goes up quickly can also go down quickly, the only difference is how long or how fast. The experience of the stock market in 2022 shows that. After surpassing 1,400 points, VNIndex plummeted. Experience in the real estate market in recent times also shows this. The land "fever" brought investors a lot of money and when it peaked, it declined until now and has not recovered.

In our country, we have witnessed a paradox that during the Covid-19 pandemic, we have seen an increase in the prices of both stocks and real estate. At that time, people explained that investors did not know where to put their money, so they bought land and stocks. The bursting of the "bubble" is a downward cycle for these markets. Only when the economy truly recovers will there be a chance for the stock and real estate markets to stabilize.

For many years, land, stocks and gold have been like three towers taking turns to reign over the investment market. This time it could be gold. Of course, the movement of the markets is sometimes beyond analysis and only practice can verify the most accurately. So investors should not rush to "catch the wave". Many wise people may not choose gold to invest at this time.