Gold price will continue to rise in 2008

As forecasted, the global gold price has climbed to $890/oz in the first days of the year, and VND17.05mil/tael on the domestic market. But experts assert that these are not the highest peaks, saying that the price may eventually reach $1,150/oz.

Dinh Nho Bang, Deputy Chairman and Secretary General of the Vietnam Gold Business Association, discussed the gold price performance in 2008:

There are several reasons behind the gold price increase in 2007. First, the devaluation of the dollar. The value of the currency cannot recover in the short term as the US indices (employment, economic growth) are not really satisfactory. Experts have warned that the world’s biggest economy will enter a recession in 2008

Second, the oil price increases due to the political uncertainty in the Middle East, Pakistan and Kenya. The oil price is expected to stay firmly high as OPEC countries say they think the current prices are reasonable and will not interfere with the market.

Third, gold speculation funds brought in 630 tons of gold in 2007, the most ever. Moreover, the fact that many central banks have been restructuring their reserves by selling dollars and buying gold has also pushed the price up.

Do you mean that the current high will be exceeded?

Yes, I do. The gold price in 2008 will be much higher than 2007. We think that the average price for 2008 will be $790/oz, while the average price of 2007 was $740-750/oz.

International experts have forecast that the gold price will reach $900/oz in the short-term, and $1,000-1,150/oz in the long-term.

How will the high prices of gold in 2008 affect the domestic market?

The biggest worry for Vietnam is not the high gold price, but the high crude oil price, which, as you may know, has had an adverse impact on the national economy.

Previously, Vietnamese people defined the prices of goods in gold, especially real estate transactions. However, the situation is quite different now, when commodities and services are valued in VND

What is your advice to domestic gold investors?

I know that a lot of investors profited when the gold price unexpectedly soared in late 2007 and early 2008. However, I think that when prices are overly high, the market will see fewer transactions. My only advice is that high profits are always associated with high risks, and that people should be very cautious when making investment deals. They should become wise investors, who don’t operate by feelings or follow others’ moves.

There are many investment channels, and investors can make bank deposits or inject money
into businesses instead of putting all their money into gold.