Gold Investment in Vietnam: A Strategic Hedge Against Currency Volatility and Global Uncertainty

Vietnam's economic landscape in 2025 has been defined by two pressing challenges: the persistent depreciation of the Vietnamese Dong (VND) and the compounding risks of global geopolitical tensions. As the U.S. Dollar (USD) strengthens and trade wars between major powers escalate, investors are increasingly turning to gold as a strategic hedge against currency instability and inflation. This article examines the dynamics driving this trend and offers actionable insights for investors seeking to allocate capital to gold in Vietnam.

The VND's Decline and Its Implications

The VND has weakened significantly against the USD, with the exchange rate climbing from VND 25,485 per USD at the end of 2024 to VND 26,264.50 by July 2025. Analysts project further depreciation, with the rate expected to reach VND 26,591.64 by July 2026. This erosion of the local currency's value is driven by a mix of domestic and global factors:
- Trade tensions: Reciprocal tariffs between the U.S. and China, including a 25% U.S. tariff on Vietnamese steel and aluminum, have reduced foreign currency inflows.
- Low forex reserves: Vietnam's foreign exchange reserves, currently under $80 billion, constrain the State Bank of Vietnam's (SBV) ability to stabilize the currency.
- Monetary policy: The SBV has prioritized growth over strict currency control, allowing moderate VND depreciation to support export competitiveness.

The depreciation has triggered a surge in gold prices, with the 24K gold price in Vietnam reaching 73.64 million VND per ounce in June 2025—a 48.6% year-on-year increase. A 1% rise in the USD/VND rate corresponds to a 1.2% jump in gold prices in VND terms, underscoring the metal's role as a natural hedge against currency devaluation.

Gold's Dual Role: Inflation and Geopolitical Risk

Vietnam's inflation rate hit 3.57% in June 2025, driven by rising costs in food, housing, and healthcare. While core inflation remains lower at 3.01%, the volatility in essential goods has heightened demand for assets that preserve value. Gold's historical correlation with inflation—particularly in emerging markets—makes it an attractive option.

Geopolitical risks further amplify gold's appeal. The war in Ukraine, U.S.-China trade disputes, and Middle East conflicts have increased global uncertainty, prompting central banks in Asia and the Middle East to aggressively purchase gold. Vietnam, too, has seen a surge in domestic demand for physical gold, with a 32.85% average increase in the gold price index in the first four months of 2025.

Strategic Allocation to Gold: A Portfolio Diversification Play

For investors, allocating to gold in Vietnam offers a dual hedge:
1. Currency risk mitigation: As the VND weakens, gold prices in local terms rise, offsetting purchasing power losses.
2. Inflation protection: Gold's intrinsic value provides a buffer against rising consumer prices, particularly in sectors like food and energy.

A prudent allocation of 5–10% of a portfolio to gold-backed assets—such as physical SJC bars, gold ETFs (e.g., GLD), or regional gold mining stocks—is recommended. For example, the SJC tael pricing system (1 tael = 37.5 grams) offers a standardized reference for valuation, while ETFs provide liquidity and diversification.

Hedging Strategies Beyond Gold

While gold is a cornerstone, investors should complement their strategies with additional tools:
- Currency forwards: Shorting VND/USD pairs via forex forwards or ETFs like FXF can lock in exchange rates and reduce exposure to sudden swings.
- USD-denominated bonds: Holding U.S. Treasuries or corporate bonds provides a stable return in a stronger currency.
- Diversified exports: Firms like FPT Corporation have hedged against USD volatility by expanding exports to Japan and borrowing in yen, reducing reliance on a single currency.

Risks and Considerations

Investors must remain vigilant about potential risks:
- Tariff uncertainty: A reduction in U.S. tariffs could stabilize the VND, while escalations may spike inflation and gold demand.
- Forex reserve depletion: If reserves fall below $75 billion, panic-driven gold demand could trigger a self-fulfilling crisis.
- Global gold price corrections: A drop in international gold prices could reduce the effectiveness of hedging strategies.

Conclusion: Acting in a Volatile Environment

Vietnam's economic environment in 2025 demands agility and foresight. The interplay between VND depreciation, inflation, and geopolitical risks has made gold a critical asset for preserving capital. By allocating to gold and diversifying hedging strategies, investors can navigate the uncertainties of a shifting global landscape.

In a region where monetary policy is constrained and external shocks are frequent, gold remains the ultimate insurance against the Dong's decline. For investors, the time to act is now—before volatility becomes a permanent feature of Vietnam's economic horizon.