Gold prices have experienced a significant decline. As the Asian trading session commenced on June 10, both New York gold futures and London spot gold prices continued their downward trend from the previous day. The spot gold price even fell below $4,200 per ounce at one point, marking its lowest level since March 23 of this year.
Analysts point out that market concerns are centered on the upcoming release of the US May CPI data scheduled for Wednesday local time. There is apprehension that the data may show a further increase, which would heighten pressure on the Federal Reserve to raise interest rates. This has prompted investors to continue reducing their gold holdings since the release of the strong US non-farm payrolls data last Friday. Consequently, the price of gold has been fluctuating downward for four consecutive trading days.
This trend has also impacted domestic gold jewelry prices in China, leading to a substantial drop, with most prices falling below 1,300 yuan per gram. A check on June 10 revealed that 周生生 (HKEX: 0116) gold jewelry was priced at 1,277 yuan per gram, a single-day decrease of 45 yuan. 老庙黄金 gold jewelry was at 1,283 yuan per gram, down 34 yuan for the day, while 老凤祥 (SHSE: 600612) was priced at 1,276 yuan per gram, a decline of 40 yuan.
On January 29, the per-gram price of gold jewelry from these national brands had reached a periodic high for the year. On that day, the prices for 周生生, 老庙黄金, and 老凤祥 were 1,708 yuan, 1,722 yuan, and 1,713 yuan per gram, respectively. Compared to these annual highs, the prices for the three brands have now fallen by 431 yuan, 439 yuan, and 437 yuan per gram, representing declines of approximately 25% each.
Recently, analysts from Citigroup Inc (NYSE: C) have expressed the view that gold prices still have room to fall further. According to a report by CNBC on June 9, analysts from the bank stated in a research note issued on the 8th that if the Strait of Hormuz remains closed through the end of summer, gold prices could potentially drop to $3,500 per ounce.
These analysts wrote, "The short-term downside risks for gold are significant. Buying on dips would only be reasonable once it is confirmed that the situation will not escalate further."
"Over the long term, we remain optimistic about the trajectory of gold; however, for investors who have not set wide stop-loss ranges and are not positioned for the long haul, entering the market at this stage carries extremely high risk," the analyst added.
The analyst further explained, "Most of the negative factors currently facing gold are directly or indirectly related to the stalemate in the Strait of Hormuz and elevated energy prices. These include rising real interest rates, a strengthening US dollar, weakening emerging market economies, and a cooling investor appetite for gold purchases due to shifting market expectations regarding US central bank policy."
"Once the situation in the Strait of Hormuz ultimately eases and energy prices retreat, the negative factors suppressing gold prices will gradually dissipate, making it highly likely that gold prices will find a bottom and stabilize," the analyst concluded.
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