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Saturday, June 22, 2024

Does gold price weigh on forex rate?

By Trieu Minh

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The domestic gold market has long been insulated from the international bullion trade, but the widening price gap has prompted many people with a strong appetite for gold to think twice. Unbridgeable gap More than ten years ago, those people who bought SJC-branded gold at a feverish price of over VND46 million a tael, in 2011-2012 – when the global price also hit a new high at US$1,920 per troy ounce – would not think they could eventually make a profit when seeing gold prices plunge later. Things have changed dramatically ever since, as the domestic gold price has not only beaten that peak, but also soared beyond all expectations. After bottoming out at VND33 million per tael in 2015 – when the global price also crashed to some US$1,000 per troy ounce – the domestic gold price fluctuated in a narrow band between VND33 million and VND36 million per tael during four subsequent years before spiraling up since 2019. Geopolitical tensions, military conflicts and economic risks have prompted investors to seek a safe haven. The relationship between the two superpowers of China and the U.S. soured in 2019 with the trade war declared by the then U.S. President Donald […]
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