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With the gold price at $1,100 dollar per ounce in late 2009, gold investors are likely to increase purchases, creating a new cycle of price increase. The greenback is depreciating in the eyes of investors and the price of the dollar and gold always go in opposite directions.
Central banks of the world have realized the need to diversify asset reserves in anticipation of the depreciation of the dollar and higher inflation, which will promote gold purchases by banks.
Average gold prices in 2010 will be high, likely staying firm at $1,200 per ounce. It is possible that the US FED will adjust the prime interest rate by the end of the first quarter of 2010, but few think it is likely.
In the new gold price cycle, the lowest gold price will be $1,049 per ounce.
I believe that 2010 gold prices in Vietnam will closely follow the world price, but the price is not likely to reach 29.5 million dong per tael, even if the world price returns to over $1,200 per ounce.
In the short term, the gold price may increase in just before Tet in February 2010, and then decrease by the end of the first quarter and early in the second quarter. However, the price will not fall below 25 million dong per tael.
Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Jewellery Company
The fact that gold prices fell to below $1,100 per ounce in late 2009 can be explained by the profit taking of investors.
The gold price may increase again to above $1,100 per ounce in the first and second quarters of 2010, when a new speculation cycle begins. The weak US economy will also factor in gold price increases to above $1,100 per ounce. The highest peak of $1,226.56 per ounce in 2009 could be repeated in 2010. However, it is not very likely to see gold prices reach the $1,300 dollar per ounce threshold.
In the third and fourth quarters of 2010, when the US economy recovers, the US FED may raise the prime interest rate, which will make the greenback stronger and the gold price decrease. In this case, the gold price would decrease gradually and there is no likelihood that the price will drop below $800 per ounce.
The State Bank of Vietnam is trying to curb trade deficits in 2010 and it is highly probable that the quota for gold imports will not be granted.
The gap between world and domestic gold prices depend on the domestic demand. If investors are interested and purchase gold, the price gap could reach one million dong per tael. If there is no interest, the gap will be only some 300,000 dong per tael.
I don’t think that in 2010, the domestic gold price will be equal to the world price or lower, which occurred in the first quarter of 2009.
Ton The Vinh Quyen, Business Director of Sacombank’s Jewellery Company
2010 will be the year of domestic gold price increases because of three factors, world price increases, the dong/dollar rate increases and high demand.
Economists have predicted that many economies in the world would recover completely from the global economic crisis. High inflation will threaten many economies, as a result of economic stimulus packages.
The dollar is forecast to depreciate, meaning that the gold price will keep rising in 2010 and may exceed the $1,300 per ounce threshold.
In Vietnam, the trade deficit is predicted to continue in 2010, while the dong is forecast to continue decreasing in value against the dollar.
The demand for precious metals keeps increasing, a factor supporting the domestic gold price.
I think that the gold price will be between 25.5-31 million dong per tael in 2010.
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