Gold demand in Vietnam falls sharply due to rapid increase in prices

The World Gold Council’s Q3 2024 gold demand trend report shows that the total global gold demand increased by 5 percent year-on-year to 1,313 tonnes, a record increase in the third quarter. For the first time, the total gold demand exceeded US$100 billion supported by strong investments in a record high price environment.

Vietnam witnessed a 33 percent quarterly decrease and a 10 percent annual decrease in demand for gold bars and gold coins

Global investment demand increased by more than double year-on-year to 364 tonnes, driven by a shift in demand for gold ETFs primarily from Western investors. Globally, gold ETFs added 95 tonnes, marking the first positive quarter since Q1 2022. Bar and coin demand fell by 9 percent, but the year-to-date total remains strong at 859 tonnes compared to the 10-year average of 774 tonnes.

Gold prices continued to rise to record highs during the quarter reaching an average of US$2,474/ounce.

Shaokai Fan, Regional Director for Asia-Pacific (excluding China), and Head of Central Banks at the World Gold Council commented, “Gold prices continue to rise strongly as investment demand increases. Geopolitical risks, concerns about economic recession and soaring gold prices are factors that have significantly increased these figures. However, high gold prices are likely to cause the demand for gold jewelry to fall and price stability is needed to change this trend.”

The World Gold Council assessed that gold jewelry demand in Vietnam decreased by 15 percent compared to the previous quarter and decreased by 13 percent compared to the same period last year. In addition to gold jewelry, Vietnam also witnessed a 33 percent quarterly decrease and a 10 percent annual decrease in demand for gold bars and gold coins. The decline in gold demand in Vietnam may be due to the sharp increase in gold prices, which restricts new purchases.

Louise Street, senior markets analyst at the World Gold Council, commented “The ‘Fear Of Missing Out - FOMO factor’ among investors has been a significant driver of increased demand this quarter. Many investors are keen to capitalize on price momentum, encouraged by potential interest rate decreases and considering gold’s role as a safe haven amidst US political uncertainty and escalating Middle Eastern conflicts.”

Looking ahead, Louise noted that the strong momentum in gold investment is likely to continue, supporting both demand and price levels. However, with over 30 record price highs in 2024, this environment presents challenges for consumer demand. Nonetheless, the prospect of economic growth is a key factor to monitor, as it could influence market dynamics.