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Gold price escalation believed to cause eight negative impacts on economy
The upward trend of the gold prices has been continuing over the past many days. Meanwhile, experts have warned that the price escalation will have bad impacts on the national economy.
Backed by the strong recovery of the gold prices in Asian market, the gold price in the morning of Oct. 25 increased by 150,000 dong per tael in comparison with late last week.
At 9:30 am, the domestic bar gold price reached 32.9-33 million dong per tael (Purchase and sale prices).
One tael is equal to 1.2 ounces.
In Hanoi, Phu Quy Gold Company quoted SJC brand gold at 32.89-32.98 million dong per tael. Meanwhile, in HCM City, the SBJ brand gold price quoted by Sacombank-SBJ was 32.91-32.97 million dong per tael.
Last week, there was a one time slight decrease in the gold price in the domestic market last week. The price falls in the world market then led to the domestic price decrease to 32.7 million dong per tael after the price hit the highest peak at 33.4 million dong per tael.
In general, the domestic prices go up and down in accordance with the world prices; however, the current increases and decreases in the domestic market prove to be lower than the world market.
At 9:40 am Hanoi time, the gold spot price in Asia rose by $11 per ounce to $1340 per ounce. If the domestic price increased in accordance with the world market, the price increase would be 270,000 dong per tael.
International analysts still give positive forecasts about the gold prices for the time to come.
The greenback value is still on the decrease, which is a positive sign for the gold prices, said Hwang Il Doo from Exchange Bank Futures in Seoul on Bloomberg.
In Vietnam, the Gold Centre under Asia Commercial Bank (ACB) has released a report, warning about the possible eight negative impacts of the gold price increases on the national economy.
Tran Trong Quoc Khanh, Director of the centre, Director of ACB-SJC Company, said the continued price increases would bring huge profit to investors, but would have negative impacts on economy.
When the gold prices increase sharply, the gold market will become less active or become frozen with few transactions and limited liquidity. The decreasing purchasing power will not help develop the gold market.
Besides, commercial banks will find it difficult to lend to customers in gold. Meanwhile, statistics showed that the capital mobilized in gold has reached 95 trillion dong (115 tons of gold, or $4.8 billion).
The third risk is that the gold price increase will encourage gold speculation. People would withdraw dong from banks to buy gold to store up instead of depositing at banks. banks then will not have capital to lend, while businesses will be thirsty for capital.
As for the loans in gold which have been disbursed, both lenders and borrowers will face high risks. The risk for lenders is that the mortgaged assets will not be valuable enough to cover in case borrowers cannot pay their debts, while the risk for borrowers is that they will have to bear higher expenses for the loans.
The fifth possible risk is that the consumer price index would increase in accordance with the gold price increases. Another big threat to the national economy is that the gold price escalation will indirectly affect the monetary policies.
The stock market would become gloomy as it is influenced by the gold price increases. Securities investors will inject their money in gold instead of stocks. The real estate market will also suffer.
vietnamnet, vneconomy, VnMedia
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