Vietnam’s Gold Revolution: Will Market Reforms Stabilize Prices and Boost Global Trade?

For centuries, gold has been a symbol of wealth and security, and in Vietnam, this precious metal holds a particularly significant place in the culture and economy. Vietnamese households may hold approximately 500 tons of gold, with most of it remaining outside the banking system. However, the country’s gold market has been plagued by issues such as price distortions, currency volatility, and illegal smuggling, leading the government to initiate a series of market reforms. These reforms aim to stabilize prices, boost global trade, and unlock the vast potential of Vietnam’s gold reserves.

The Current State of Vietnam’s Gold Market

Vietnam’s domestic gold market has operated under tight government restrictions for decades, creating significant price disparities between local and international markets. Before the reforms, domestic gold prices maintained a substantial premium over global rates. In mid-2025, price gaps reached as high as 20 million dong ($758) per tael, with the premium averaging approximately 10% above international prices. The State Bank of Vietnam (SBV) held monopoly control over gold imports and exports, and limited market participants created supply constraints. This situation has led to several challenges, including:

Price distortions: The significant price difference between domestic and international gold rates has created opportunities for arbitrage and speculation, distorting the market.
Currency volatility: High domestic gold prices have encouraged currency conversion to purchase gold, while smuggling activities have created unofficial currency outflows, putting pressure on the Vietnamese dong.
Illegal gold smuggling: The price gap has incentivized illegal gold imports, depriving the government of tax revenue and undermining market stability.

Key Objectives of the Gold Market Reforms

To address these challenges, the Vietnamese government has outlined several strategic goals driving the market changes:

Narrowing the domestic-international price gap: The aim is to reduce the price difference from the current 10% to 2-3%, making the domestic market more competitive and attractive to investors.
Stabilizing the Vietnamese dong: By reducing currency speculation and limiting illegal gold smuggling activities, the reforms seek to stabilize the dong and enhance its value.
Limiting illegal gold smuggling activities: Improved market transparency and surveillance will make detecting illegal activities easier for authorities, while narrowing the price gap will remove the profit incentive for illegal imports.
Bringing idle household gold reserves into productive economic circulation: Reforms could mobilize these assets for productive economic use and potentially expand financial system liquidity.
Creating opportunities for jewelry manufacturing and export growth: By liberalizing the gold market, Vietnam aims to foster the growth of its jewelry industry and increase its exports.

What Specific Changes Do the Gold Reforms Include?

The most fundamental change involves dismantling the government’s exclusive control over gold:

Termination of state monopoly on imports and exports of raw bullion.
Licensing of qualified private companies and banks to participate in gold trading.
Creation of a more competitive market environment.

The implementation officially begins October 10, 2025.

New Licensing Regime

Vietnam has ended its state monopoly on gold bullion production, introducing a licensing regime that creates opportunities in bullion, jewelry, and digital platforms, while imposing strict barriers and regulatory challenges. The framework, overseen by the SBV, opens structured opportunities for both domestic and foreign investors.

Enterprises may be granted a license by the SBV if they meet the following conditions: possess a gold bullion trading license, have charter capital of at least VND 1 trillion (approximately USD 39.2 million), and have not been administratively sanctioned for gold trading violations, or have resolved all consequences if previously sanctioned. Commercial banks may be licensed to produce gold bullion if they hold a gold bullion trading license, have charter capital of at least VND 50 trillion (approximately USD 1.96 billion), and similarly, have not been sanctioned or have fully addressed any past violations.

Currently, eight banks meet the capital requirement: Vietcombank, BIDV, VietinBank, Agribank, VPBank, Techcombank, MB, and ACB.

Managing Currency Impacts

Authorities must carefully manage potential currency impacts: Gold imports require foreign currency outflows, and an initial surge in imports could pressure the dong. A balance between market liberalization and currency stability is needed, calling for a coordinated monetary policy approach.

Potential Impact on Global Trade

Vietnam’s gold market reforms have the potential to significantly impact global trade:

Increased gold imports: As the domestic market opens up, Vietnam’s gold imports are likely to increase, boosting demand for gold from major exporting countries like Hong Kong, Australia, and Japan. In 2023, Vietnam imported $200M of Gold, becoming the 45th largest importer of Gold (out of 174) in the world.
Growth of the jewelry industry: With easier access to raw materials and a more competitive market, Vietnam’s jewelry industry could flourish, leading to increased exports of gold jewelry and related products.
Regional impact: The reforms may influence gold flows throughout Southeast Asia, potentially reducing smuggling between Vietnam and neighboring countries and shifting regional price dynamics.

Challenges and Opportunities

While the gold market reforms hold great promise, several challenges remain:

Implementation: The success of the reforms will depend on careful implementation, particularly regarding licensing criteria, market surveillance capabilities, and management of the transition period.
Market manipulation: Vietnamese authorities are growing increasingly concerned about market manipulation and speculative behavior.
Global economic factors: The trajectory of gold prices—both globally and in Vietnam—remains uncertain, and external factors such as geopolitical instability and economic uncertainty could impact the market.

However, these challenges also present opportunities:

Financial system modernization: The gold reforms represent a broader shift in Vietnam’s approach to financial markets and economic management, signaling a move towards a more liberalized system.
Investment opportunities: Vietnam’s evolving gold market presents both challenges and opportunities for investors seeking market strategy insights.
Regional leadership: Vietnam’s approach may provide valuable lessons in balancing market liberalization with financial stability concerns for the broader region.

Advice

For Investors: Proceed with caution. Diversification is key: pairing Vietnamese gold investments with global bullion ETFs (e.g., SPDR Gold Shares, GLD) and dollar-denominated bonds can balance exposure.
For Regulators: The challenge will be to respond quickly and wisely to an ever-evolving market without triggering further volatility.

Conclusion

Vietnam’s gold market reforms represent a transformative moment for the country’s financial system. By transitioning from strict state control toward a regulated but competitive market system, Vietnam aims to address longstanding issues of price distortion, currency pressure, and market inefficiency. If executed effectively, the changes could unlock significant economic value, stabilize prices, boost global trade, and solidify Vietnam’s position as a key player in the global gold market.