July 27, 2026, Hanoi - As military tensions in the South China Sea continue to escalate, Vietnamese people are experiencing an unprecedented gold buying frenzy. From Saigon Jewelry Company in Ho Chi Minh City to gold shops in Hanoi's Old Quarter, queues for gold stretch for tens of meters, with some stores forced to impose purchase limits. International gold prices have surged over 8% in the past two weeks, hitting a historic high of $2,850 per ounce, while domestic gold prices in Vietnam have broken through 80 million Vietnamese dong per tael (about $3,400) due to premium effects, setting a record since national independence.
Geopolitical Powder Keg: South China Sea Dispute Ignites Risk Aversion
The direct trigger for this gold rush was a reef standoff in the South China Sea in mid-July. Military friction between China, Vietnam, and the Philippines in disputed waters rapidly escalated, with the US Seventh Fleet announcing large-scale joint exercises in the region, sending the global risk index VIX soaring 25% in a single day. Against this backdrop, gold's appeal as the ultimate safe-haven asset has been greatly amplified.
The State Bank of Vietnam (SBV) issued a statement on July 26, saying it would closely monitor gold market volatility and hinting at possible measures to increase domestic gold supply to stabilize premiums. However, analysts noted that the central bank itself has been quietly increasing its gold reserves - according to the latest data from the International Monetary Fund (IMF), Vietnam's gold reserves increased by 12 tons to about 200 tons in June, the fourth consecutive month of increases. This was interpreted by the market as a "national-level" risk-aversion signal, further fueling public gold buying.
Currency Depreciation Expectations: Vietnamese Dong Under Pressure
Beyond geopolitical risks, the depreciation pressure on the Vietnamese dong is a major reason for the shift to gold. Since 2026, the Federal Reserve's high interest rate policy has kept the US dollar index strong, putting pressure on Asian emerging market currencies. The dong against the US dollar hit a historic low of 25,500 in July, depreciating by over 4%. Import inflation has pushed up domestic prices, and people's concerns about the shrinking purchasing power of their currency are growing daily.
"Although deposit rates are 5%, inflation has exceeded 6%, so saving means losing money," Nguyen Van Hung, who runs a small business in Hanoi, told our reporter. He has converted 40% of his bank deposits into physical gold bars and coins. "Gold at least holds its value, and in times of turmoil, it can be exchanged for food." Hung's choice is not an isolated case. Data from the Vietnam Gold Trading Association shows that individual gold purchases in Q2 2026 surged 67% year-on-year, with demand for physical gold bars dominating.
Global Supply Chain Turmoil: Gold Becomes "Hard Currency"
The third factor exacerbating the gold rush is global supply chain uncertainty. The protracted Russia-Ukraine war, recurring Middle East tensions, and threats to the safety of South China Sea shipping lanes have caused sharp fluctuations in energy and food prices. In this environment, gold's "hard currency" attribute has been redefined - it is not just an investment but a survival necessity. Vietnam, located at the core of the Southeast Asian supply chain but highly dependent on imports, is particularly vulnerable.
"People are starting to hoard gold as an ultimate means of payment, not just as part of their investment portfolio,” said Le Thi Ngoc, chief analyst at Vietnam Global Capital Research Institute, in her latest report. "This mindset shift is structural, indicating that retail gold demand will remain high in the coming years. For retail investors, the question is no longer 'whether to buy gold' but 'at what price and how much to buy."
How Should Investors Rationally Position?
Facing the surging gold frenzy, investors need to calmly distinguish between short-term trading and long-term allocation. Here are some suggestions:
- Dollar-cost average and avoid chasing highs: Current gold prices are at historic highs, and the risk of short-term pullbacks cannot be ignored. It is recommended to use a "DCA" approach, purchasing small amounts of physical gold or gold ETFs weekly or monthly to average out costs.
- Control allocation ratio: While gold has hedging functions, it is not a panacea. Gold allocation in personal assets is recommended at 10%-20%, with the remaining funds kept in highly liquid assets (such as money market funds) and diversified investments.
- Prioritize products with good liquidity: Physical gold bars and coins offer good liquidity and no credit risk, suitable for long-term holding; gold ETFs are convenient for short-to-medium-term trading. Avoid products like jewelry with high premiums and low buyback rates.
- Pay attention to local policy risk: The Vietnamese government may impose restrictions on gold imports or transactions at any time, such as a special consumption tax. Investors should closely monitor policy changes to avoid losses from regulatory shifts.
- Never use leverage to buy gold: Recently, some retail investors have gone long with high leverage through off-market margin financing or gold futures, risking margin calls if gold prices fluctuate sharply. Gold investment should be limited to one's own funds.
Future Outlook: Safe-Haven Demand May Continue to Drive Gold Prices
Looking ahead to the second half of the year, most institutions remain bullish on gold. Goldman Sachs' latest report raised its year-end 2026 gold price target to $3,000, citing a global central bank buying spree, prolonged geopolitical conflicts, and uncertainty from the US election. However, Citibank warned that if the Fed unexpectedly turns hawkish or the South China Sea situation eases, gold could see a sharp 20% correction.
For investors in Vietnam and Southeast Asia, gold is no longer just an anti-inflation tool but has become an "insurance policy" to hedge geopolitical risks. In such an uncertain era, prudent asset allocation and risk management are far more important than blindly chasing gains.
