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From a 30% gold price gap to below 3% — Vietnam’s gold market has changed dramatically
Since the first major inspection of the gold industry in May 2024, we have seen a series of measures that, on the surface, may appear unrelated:
- Gold purchases above VND20mn must be paid via bank transfer.
• Authorities stepped up inspections of gold and jewelry companies.
• Crackdowns targeted gold smuggling and the use of USDT/crypto as an alternative payment channel.
• Regulations and monitoring of gold trading have continued to tighten.
But all of these measures address one underlying issue: the large gap between domestic SJC gold prices and global gold prices.
At its peak, the gap exceeded 30%. On the surface, this may look like a problem limited to gold investors. In reality, it created much broader distortions.
A large price gap created incentives for gold smuggling, which in turn increased demand for USD on the black market. As USD was used to finance gold imports outside the formal system, it contributed to USD leakages from the domestic financial system and put additional pressure on the FX market.
Fast forward to today, and the picture is very different.
The domestic-global gold price gap has narrowed dramatically, from over 30% to below 3%.
Even more interestingly, USD prices on the black market — and USDT prices — are now below the official bank quotation.
This is a good reminder that seemingly isolated regulatory measures can have much broader macroeconomic implications.
The objective was not simply to bring SJC gold prices closer to global prices. It was also about reducing arbitrage, limiting smuggling, improving transparency in FX flows and ultimately reducing pressure on Vietnam’s USD liquidity.
Sometimes, the most important impact of a policy is not where the policy is directly applied, but the distortions it removes elsewhere in the economy.
