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Anxious consumers in Vietnam and Thailandare rushing to buy gold – a sign of Asia’s mounting alarm, analysts say, over currency devaluations against the US dollar, inflation, and geopolitical uncertainty.
Visible queues of buyers waiting to snap up chunks of the yellow metal have persisted outside banks in the Southeast Asian nations for months, in scenes that underscore a growing sense of economic and geopolitical instability rippling through the region.
“What they are trying to do is to protect themselves against local currency depreciation,” said Singapore-based commodities and financial markets expert Michael Langford.
“If you don’t have much money in life, and all the goods that you buy and sell are ultimately priced in US dollars, and your local currency is going down, that doesn’t feel good. You have got inflation working against you, plus you’ve got currency depreciation. You are getting hit twice.”
Southeast Asia’s rush for gold has pushed prices up over the last six to 12 months, said Langford, who is executive director of corporate consultancy Airguide International.
Gold prices have soared to new heights this year, peaking at an all-time high of US$2,450 an ounce in May.
In China too, waning confidence in property and stock markets has seen investors chase gold as a safe haven.
Anxiety over economic turmoil, geopolitical insecurity and currency devaluations is fuelling a flight to gold, a traditional safe-haven investment.
Currency depreciation bites hardest for small-time investors, eroding their savings and inflating costs.
Southeast Asians are particularly inclined to buy gold due to long-held beliefs that the metal is a reliable and tangible “long-term store of value” compared with other assets, according to Shaokai Fan, the World Gold Council’s head of central banks and Asia-Pacific.
And it’s not just these everyday investors who are seeking a safe haven – central banks are also buying gold at a “blistering rate”, according to the Council.
More than 80 per cent of central banks expect their reserve managers to increase their gold holdings over the next 12 months, a survey published by the council on June 18 revealed – stockpiling the precious metal as a bulwark against heightened geopolitical risks and mounting macroeconomic uncertainties.
“Extraordinary market pressure, unprecedented economic uncertainty and political upheavals around the world have kept gold front of mind for central banks,” Fan said Fan, the council’s central banks and Asia-Pacific head.
“What has been remarkable is that despite record demand from the official sector in the last two years, coupled with climbing gold prices, many reserve managers still maintain their enthusiasm for gold.”
Typically, high US interest rates would depress gold prices. Yet gold’s sustained strength suggests investors are more concerned with sticky global inflation, economic uncertainty, and geopolitical tensions than rising rates, National University of Singapore Business School strategy and policy lecturer Xu Le wrote in a May analysis.
In Asian markets, investors are bucking their typical pattern of buying gold only on price dips – opting to purchase the precious metal even as prices surge, the World Gold Council said.
‘Fighting to buy’
Historically, Vietnam and Thailand have been some of Southeast Asia’s biggest gold buyers, while China and India have dominated the wider regional market.Gold buyers rushed Vietnam’s state-owned banks in June after the central bank agreed to sell more gold to meet public demand and drive down prices, local reports say.
Banks rapidly depleted their supplies, forcing them to limit purchases to 1 tael per buyer. The queues continued for weeks until the banks implemented an online registration system for gold purchases, which also filled up within minutes each day.
”Gold bars have now become the major channel of investment in Vietnam
Huynh Trung Khanh, Vietnam Gold Traders Association
The sell-off briefly calmed gold prices, but they remained elevated because buyers are still worried about plunging savings interest rates, the frozen real estate market, and the ongoing devaluation of the dong, Vietnam Gold Traders Association vice-chairman Huynh Trung Khanh told the Asia-Pacific Precious Metals Conference in Singapore in June.
“Gold bars have now become the major channel of investment in Vietnam,” he said. “They are now queuing in the rain and in the sun to buy bars … commercial banks have sold two tonnes of gold in one week, previously they sold two tonnes in one month.”
Vietnam’s currency, the dong, has depreciated about 10 per cent versus the US dollar since the tail-end of the pandemic in 2022, with the downward trend continuing, foreign exchange data shows.
Meanwhile, Vietnam’s inflation rate touched 4.44 per cent in May – its highest level since early 2023.
In Thailand too, ordinary investors are flocking to gold. Nuttapong Hirunyasiri, managing director of MTS Gold Group told the Asia-Pacific Precious Metals Conference this was the first time in his career he had seen Thais buy gold when prices were rising.
“At this price people should be selling but everybody is buying. People are actually fighting to buy,” he said.
“The local consumers are very smart, when they hear some news, they straightaway run to the gold shops.”
He described how, following Iran’s missile strike on Israel in April, long lines immediately formed outside gold shops in Thailand – a pattern that repeated with each new bout of bad news.
