Since mid-May, international gold prices have been under sustained downward pressure, falling below the $4,500 per ounce mark. Wind data shows that on May 20th, the spot price of London gold hit a low of $4,453 per ounce during the session, marking a new low since March 31st. Compared to the historical high of nearly $5,600 per ounce in January this year, gold prices have retreated by over 20%.
The recent correction in international gold prices is primarily driven by stronger-than-expected U.S. inflation data, which has shifted market expectations regarding monetary policy.
According to the latest data from the U.S. Labor Department, the U.S. Consumer Price Index (CPI) rose 3.8% year-on-year in April, while the core CPI, excluding food and energy, increased 2.8% year-on-year, both exceeding market expectations. The Producer Price Index (PPI) also showed significant warming, rising 6.0% year-on-year in April, the highest level since December 2022.
These figures have substantially heightened market concerns about persistently high inflation, directly cooling expectations for the Federal Reserve to cut interest rates within the year. Some institutions even predict that the Fed may resume interest rate hikes as early as 2027. Consequently, the U.S. dollar index has strengthened, and U.S. Treasury yields have surged. As a non-yielding asset, the holding cost for gold has significantly increased, leading to reduced willingness for capital allocation and directly dragging down gold prices.
Furthermore, multiple short-term negative factors have further amplified the correction in gold prices. India, the world's second-largest gold consumer, significantly raised its gold import tariff from 6% to 15% starting May 13th, directly suppressing physical gold demand. Simultaneously, the substantial gains accumulated during the previous high-price period have led to concentrated selling at elevated levels, exacerbated by negative news, deepening the decline in gold prices.
How long will this adjustment phase last? In the short term, the trend of a strong U.S. dollar index and high U.S. Treasury yields is unlikely to change rapidly, suggesting that the pressure on gold prices may persist. However, from a medium- to long-term perspective, the underlying support logic for gold prices remains intact.
Currently, global central bank demand for gold purchases remains robust. The World Gold Council's "Global Gold Demand Trends Report" for the first quarter of 2026 shows that net gold purchases by global central banks reached 244 tons in the first quarter. This purchasing scale not only exceeds the level of the previous quarter but also surpasses the five-year average. Meanwhile, gold's safe-haven attributes and reserve value continue to be prominent. Coupled with the gradually widening supply-demand gap in the industry, these factors collectively form the medium- to long-term foundational support for gold prices.
It is noteworthy that while several institutions have lowered their short-term price forecasts for gold, they maintain their long-term bullish outlook. JPMorgan Chase's latest precious metals research report indicates that the core factors supporting the long-term rise in gold have not fundamentally changed and are even further reinforced by the current geopolitical situation.
For ordinary investors, it is essential to rationally view the fluctuations in gold prices, avoiding blind short-selling, bottom-fishing, or heavy speculative positions. Investors should also consider their own risk tolerance and investment horizon to appropriately allocate the proportion of gold within their personal assets.
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