Gold as a Hedge Against VND Devaluation: Strategic Insights for Investors in Vietnam

In the second half of 2025, Vietnam's economic landscape has been defined by two interlinked forces: the persistent depreciation of the Vietnamese Dong (VND) and the surging demand for gold as a safeguard against currency erosion. With the VND/USD exchange rate hovering near 26,200–26,240 and inflationary pressures intensifying, investors are increasingly turning to gold to preserve capital. This article examines how VND volatility and inflation are reshaping investment strategies, using August 2025 data to outline actionable steps for diversifying into physical gold.

The VND's Fragile Position: A Catalyst for Gold Demand

The VND has weakened by 4.37% year-to-date in 2025, with the USD/VND rate reaching 26,176.50 on August 4, 2025, before fluctuating within a narrow but downward-trending range. Over the past 12 months, the VND has lost significant ground against the USD, driven by global macroeconomic forces, including the U.S. Dollar Index (DXY) surpassing 108.6 and the Federal Reserve's cautious approach to rate cuts. Domestically, Vietnam's inflation rate of 3.22% in 2025, combined with limited foreign exchange reserves (~$80 billion), has exacerbated the currency's vulnerability.

The depreciation of the VND has directly impacted the cost of imported goods, including gold. As of August 2025, the global gold price stands at $3,233.8 per troy ounce, but in Vietnam, the SJC 24K gold benchmark ranges between VND 3,200,000 and VND 3,220,000 per gram—a 32.85% premium over international benchmarks. This premium reflects the VND's erosion and the structural demand for gold in Vietnamese households, where 30% of families hold gold for cultural, ceremonial, and intergenerational wealth preservation.

Gold's Role as an Inflation-Protected Asset

Gold has emerged as a critical hedge against both VND devaluation and inflation. By August 2025, 24K gold in Vietnam had surged to 318,667 VND per gram, a 22.24% year-on-year increase. This surge is not merely a reflection of global gold price movements but a direct response to the VND's weakening purchasing power. For instance, the cost of importing gold into Vietnam has risen due to the higher exchange rate, pushing domestic prices further above global levels.

The cultural and economic dynamics in Vietnam amplify gold's appeal. While global investors often view gold as a safe-haven asset during geopolitical crises (e.g., U.S.-China trade tensions, the war in Ukraine), Vietnamese investors are motivated by a dual need: to protect against currency depreciation and to align with traditional practices. This has led to a surge in demand for SJC-certified 24K gold bars, which are produced by the Saigon Jewelry Company and traded at a 10–15% discount to the global price.

Strategic Investment Opportunities in August 2025

For investors seeking to hedge against VND volatility, the following strategies are recommended:

1. Allocate 5–10% of Portfolios to 24K Gold Bullion
   SJC-certified gold bars, available in 1 tael (37.5 grams) and 1 ounce (31.1 grams) sizes, offer a reliable store of value. At current prices, a 1 tael bar costs VND 120,000,000–120,500,000, equivalent to $4,570–4,590 based on the VND/USD rate. This allocation provides a buffer against currency devaluation while leveraging the cultural demand for gold.

2. Diversify with USD-Denominated Assets
   Pairing gold investments with U.S. dollar deposits or Treasury bonds can mitigate exposure to VND fluctuations. With the VND expected to depreciate further (forecasts suggest a rate of 26,550 by year-end), USD assets offer a counterbalance to local currency risks.

3. Monitor Exchange Rate Volatility and Regulatory Reforms
   The State Bank of Vietnam (SBV) has introduced forward contracts and a 5% trading band to stabilize the VND/USD rate. Investors should track these interventions and the implementation of Decree No. 24/2012/ND-CP, which aims to liberalize the gold market and reduce domestic price premiums.

Risks and Considerations

While gold offers a robust hedge, investors must remain cautious. The high domestic premium (32.85% over global prices) could lead to capital losses if regulatory reforms align local prices with international benchmarks. Additionally, liquidity constraints and storage costs for physical gold require careful planning. A diversified approach—combining gold with USD assets and hedging strategies—can mitigate these risks.

Conclusion

As the VND continues to weaken and inflationary pressures persist, gold remains a cornerstone of risk management for Vietnamese investors. The August 2025 data underscores the urgency of diversifying into 24K bullion, particularly SJC-certified bars, to safeguard capital against currency erosion. By adopting a strategic, data-driven approach, investors can navigate macroeconomic uncertainties while leveraging the cultural and economic dynamics that make gold a unique asset in Vietnam's market.