On September 6, domestic gold prices continued to break records, gold bars exceeded 135 million VND/tael; gold rings exceeded 130 million VND/tael. While many investors are excited about large profits, experts say that this development has many potential risks if the crowd mentality continues to be swept away by price fever.
Mr. Nguyen Quang Huy, CEO of the Faculty of Finance - Banking, Nguyen Trai University, commented that the breakthrough of gold stems from many layers of factors. On the international level, expectations of the US Federal Reserve to loosen monetary policy, a weak USD and global risk-off demand have brought world gold prices to record levels. In the country, information about the possibility of opening the gold market in harmony with traditional hoarding psychology has caused demand to increase sharply, while physical supply has not yet supplemented. This is what pushes domestic prices up faster than the world price".
However, this huge difference also has consequences: "For the market, prices are no longer an accurate reflection of the world, easily leading to unfounded decisions. For businesses, the rapid increase in raw material costs puts pressure on businesses. For people, putting capital into gold at too high a price poses a potential risk if the market adjusts".
Mr. Huy said that the biggest risk lies in the crowd mentality that motivates many buyers to chase after prices, while gold is already fluctuating strongly. "When the information flow changes, the market can completely reverse, and those who participate late will suffer great losses. Therefore, individual investors should consider gold as a long-term risk hedge, holding a reasonable proportion in their portfolio instead of considering it a short-term profit channel. It is necessary to avoid borrowing or using leverage to buy gold, because unexpected fluctuations will create huge financial pressure".
With a medium-term outlook, Mr. Huy emphasized that the price trend will depend on global monetary policy, the progress of additional domestic supply and market sentiment. If the new gold source is released promptly and transparently, the price gap may gradually narrow. But at the current high price zone, alertness and caution are the key. Rapid profits always come with great risks, while the long-term goal of the market is still balanced, stable and sustainable".
