How will domestic gold fluctuate?
This is inaccurate considering market trends and investor reactions.
In terms of market trends, when the New York market closed on Tuesday, its gold price had increased to US$790.30 per ounce.
When the Hong Kong stock exchange opened yesterday, the gold price per ounce had reached about $802.50.
When the gold price increases overseas, the domestic price in Vietnam rises accordingly.
At 9:30 a.m. yesterday, the price at the Hanoi Bank of Agriculture was VND1.564 million ($97.47) per tael and VND1.56 million ($97.22) per tael at Ngoc Tin Jewelry Company.
In fact, the floor price for gold reached VND1.53 million per tael and will not sink lower any time soon.
In terms of investor response, the US economy did not cause the domestic gold price to decrease.
It was instead investor concerns that pushed up the gold price.
The US Federal Reserve has recently slashed its forecast for US economy growth in 2008, citing as reasons a tighter market and a real estate slump.
Fed policy makers predicted that the world's largest economy will grow by only 1.8 to 2.5 percent, compared to 2.5 to 2.75 percent in a June prediction.
Following the forecast, the US dollar had decreased to its lowest recorded level against the euro.
In contrast, the crude oil price rose to $98.62 per barrel, partly because of the weak US dollar and the concern over the world's oil supply.
The increase in the gold price could be caused by several reasons, including alterations in each country's foreign exchange reserves, especially in those countries with assets more than $100 billion such as China, Germany, India, Japan, the Republic of Korea, Russia, and Singapore.
The gold price therefore could fluctuate and would generally follow the changes in the world's crude oil price and the US market.
As long as investors still consider the buying and selling of gold as profitable, the gold price could surpass the current record of VND1.65 million per tael domestically and $850 per ounce in international markets.
By Ngoc Minh
Sunday, November 25, 2007
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