With banks raising interest rates on gold deposits, Vietnamese analysts view the metal as a good investment option and a hedge against inflation.
Le Hung Dung, chairman of the SJC, Vietnam's largest gold trader, said historically the metal has always been on an upward trend.
Many countries and investment funds are continuing to buy gold even as supply is running low and production costs are rising, which means prices are likely to increase further this year, he said.
Bullion is climbing for the 12th straight year as investors seek a store of wealth amid volatility in stock markets, depreciating currencies, and the threat of inflation, Bloomberg said. Gold reached a record US$1,921.15 an ounce in September.
Analysts predict the metal could top $2,000 or even $2,100 this year unless the global economy recovers completely from the recession and China stops buying gold.
China is expected to overtake India as the largest consumer of gold this year.
With the economic volatility continuing and the European debt crisis not resolved yet, investors will turn toward gold, Dau Tu newspaper quoted Nguyen Thi Cuc, deputy general director of gold trading firm PNJ, as saying.
The State Bank of Vietnam seeks to stabilize the gold market this year, in fact naming it as one of its priorities.
Governor Nguyen Van Binh said between 300 and 500 tons of gold are held by the public and this needs to be put to good use for the economy.
"The management of the gold market should protect the right to keep gold assets, but the resources also have to be attracted and used for social and economic development, particularly during these tough times," Binh said in an interview published on the central bank's website on February 8.
He said under a new plan expected to be announced soon the government will not interfere in the market but will ask credit institutions to attract the gold held by investors. The deposits will be converted into foreign exchange that will benefit the country more, he said. He was referring to the gold trading that banks have been allowed to do abroad.
Last week joint-stock lenders Eximbank and ACB hiked their interest rate on gold deposits to as high as 3 percent, up from 1-2.45 percent.
Banks cut gold interest rates to below 1 percent last May, following a directive by the central bank to stop gold loans and restrict gold deposits. The rates began to go up after banks were allowed to open gold trading accounts again in October.
Economist Pham Do Chi said with inflation staying high, gold is a good investment option. It should account for at least 10 percent of investors' portfolio since it is a good hedge against inflation, he said.
Real estate is also a good option for long-term investment though prices have not hit bottom, he said, warning property prices could go down by another 15-20 percent by 2013 after falling 20-30 percent over the last two years.
Since a downturn often lasts five years, the Vietnamese property market, which began to decline in 2008, could pick up in 2014, he said.
Both the real estate and the stock markets need economic reforms to attract investors back, he added.