When news broke that gold prices had climbed back above $4,500 per ounce, Ms. Dong excitedly opened her mobile banking app to check the gold accumulation page. For her, it seemed like another opportunity to "buy the dip" and profit.
Many investors shared similar thoughts. During the May Day holiday, international gold and silver prices experienced continuous fluctuations. On May 4, spot gold briefly fell below the $4,500 per ounce mark, hitting a near one-month low. Faced with such volatility, some investors decisively increased their positions, others anxiously waited on the sidelines, while those who had bought heavily at the year's peak faced sleepless nights over paper losses.
Why did gold prices take a roller coaster ride? Is there still opportunity ahead?
The precious metals market witnessed two distinctly different trends during the holiday period. Wind data shows that from May 1 to May 5, COMEX gold and COMEX silver fell by 1.47% and 1.3% respectively. Influenced by geopolitical factors, the deepest drop occurred on May 4, with COMEX gold falling 2.41% that day. Spot gold touched a low of $4,499.92 per ounce, setting a new near one-month low. Silver saw even steeper declines, with COMEX silver dropping over 4% on May 4 alone.
The sudden price drop caught many investors who had bought heavily at high levels off guard. Investor Mr. Liu reported that after purchasing investment gold bars earlier in the year, his paper losses approached nearly 6,000 yuan as prices fell, particularly on May 4. "I struggle daily whether to cut losses—selling means realizing the loss, but holding risks further decline," he said. Fortunately, prices rebounded towards the holiday's end, gradually narrowing his paper losses.
On May 5, signs of easing tensions between the U.S. and Iran helped spot gold rebound to $4,555 per ounce. During early Asian trading on May 6, gold extended gains, reclaiming the $4,600 per ounce level. At the time of writing, spot gold traded around $4,690 per ounce.
Domestic consumer demand remained generally subdued during the holiday. Branded gold jewelry prices generally fell below 1,400 yuan per gram around May 1, with Chow Tai Fook reporting 1,392 yuan per gram on May 5. However, lower prices did not spark a buying frenzy. "Many people inquired, but few actually purchased—everyone still follows the 'buy when rising, not when falling' mentality," a gold jewelry salesperson noted.
A puzzling phenomenon for many investors was why gold prices fell to a near one-month low despite escalating Middle East tensions, rather than surging. Qu Rui, Senior Associate Director at Dongfang Jincheng Research and Development Department, analyzed that the decline primarily stemmed from Middle East tensions quickly raising concerns about oil supply, driving up crude prices. Soaring oil prices increased inflationary pressures, whose persistence forced the Federal Reserve to maintain high interest rates, which in turn reduced gold's appeal.
Previously, external expectations suggested the Fed might implement two rate cuts within 2026. However, on April 30, the Fed meeting announced maintaining rates unchanged in the 3.50% to 3.75% range. Qu Rui noted this decision aligned with market expectations, as markets had already priced in the Fed's stance pre-meeting. She added that the rate hold only marginally affected medium-to-long-term gold price expectations without altering gold's core pricing logic.
How should investors respond to current gold price fluctuations? Qu Rui advised investors to anchor decisions on gold's core pricing logic, developing strategies based on their capital attributes and risk preferences, while avoiding blind chasing of rallies or panic selling.
For medium-to-long-term allocation funds, she emphasized gold's core value lies in hedging against sovereign credit risks, stagflation risks, and geopolitical uncertainty. Short-term liquidity shocks causing price volatility haven't changed gold's fundamental upward support; instead, pullbacks offer better entry points. Investors can use phased fixed investments to smooth short-term volatility risks while adhering to long-term allocation logic.
Short-term trading funds should closely monitor three core pricing variables: real U.S. dollar yields, geopolitical developments, and Fed policy expectations. Position management and stop-loss/take-profit strategies are crucial, avoiding盲目追高 at high crowd-long levels and staying alert to liquidity shocks from unexpected geopolitical events or policy statements.
Looking ahead, institutional views diverge. Morgan Stanley adjusted gold to "tactical underweight" in a May 3 report, citing Fed hawkish signals and potential geopolitical de-escalation as factors weakening gold's upward momentum. Goldman Sachs maintained its year-end 2026 gold price forecast of $5,400 per ounce. Bank of America remained bullish, raising its 2026 average gold price expectation to $5,093 per ounce and maintaining a 12-month target of $6,000 per ounce.
Qu Rui believes gold will maintain a pattern of short-term wide fluctuations but medium-to-long-term upward trend. Short-term, amid反复 geopolitical tensions, increased Fed internal divisions, and rapidly shifting market sentiment, gold will likely continue wide swings, with possible periodic pullbacks. However, she stressed that U.S. fiscal rigid constraints have set a ceiling for Fed policy tightening, making deep corrections highly unlikely.
Medium-to-long-term, the core logic supporting gold's rise remains fundamentally intact. Four key supports—prolonged U.S.-Iran conflicts exacerbating U.S. fiscal sustainability concerns, structural动摇 in the dollar credit system, strategic gold purchases by global central banks, and stagflation risks pressuring Fed policy shifts—will continue driving gold prices upward.
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