Recently, international gold prices have fallen sharply, with the London spot gold price hitting a one-year low on October 31, touching an intraday low of $3,869.96 per ounce.
Wind data shows that as of 17:00 on November 2, spot gold was quoted at $3,898.31 per ounce, down 30.37% from its historical high of $5,598.75 per ounce on January 29 this year.
The continued weakness in international gold prices has quickly transmitted to the terminal consumer market, with retail prices of gold jewelry from major brands falling in tandem, some brands seeing prices drop by nearly 550 yuan per gram from their peak this year.
Industry experts believe that in the short term, the direction of international gold prices will still mainly depend on market expectations for the Federal Reserve's monetary policy and changes in the U.S. dollar trend; in the long term, factors such as geopolitical uncertainty, high sovereign debt in some countries, central banks advancing reserve asset diversification, and the deepening of the "de-dollarization" process will provide strong support for international gold prices.
Short-term decline relatively obvious
Regarding the recent pullback in international gold prices, Yang Changlong, senior investment advisor at Shaanxi Jufeng Investment Consulting Co., Ltd., analyzed in an interview that the core trigger lies in U.S. inflation resilience exceeding market expectations.
Inflation data prompted the market to reassess the Federal Reserve's rate hike path, which in turn pushed both real U.S. Treasury yields and the dollar index higher, raising the holding cost of gold.
At the same time, concentrated unwinding of long leverage accumulated during the earlier rise in international gold prices further amplified the magnitude of this pullback.
Changes on the capital side confirm this judgment.
From September 30 to October 30, the world's largest gold ETF, SPDR Gold Trust (GLD), saw its holdings decrease by about 14.043 tons, a decline of about 1.33%, corresponding to a total value of about $10.69277 billion.
Liu Siyuan, chief analyst at Lingxiu Finance, said in an interview that earlier gold long positions were overly concentrated, and after the market weakened, quantitative stop-losses and investors' follow-up selling reinforced each other, forming a negative feedback loop that led to a relatively large short-term decline.
In addition, recent international gold price movements have also shown a characteristic of the safe-haven logic "failing," namely that geopolitical risks pushing up oil prices and inflation expectations instead strengthened the narrative of Federal Reserve rate hikes, causing funds to shift toward U.S. Treasuries with coupon income, while demand for zero-yield gold as a safe haven was clearly diverted, creating a reverse transmission in which "the more tense the situation, the more gold prices fall."
It is worth noting that in the early hours of October 29 Beijing time, the Federal Reserve announced it would keep the target range for the federal funds rate unchanged at 3.75% to 4%.
Although this "wait-and-see" move was within market expectations, against the backdrop of high international oil prices and still-sticky U.S. core inflation, market expectations for a 25-basis-point Fed rate hike in December have clearly strengthened.
In Liu Siyuan's view, high policy rates may become the norm, thereby continuing to suppress gold prices.
At present, a 25-basis-point Fed rate hike in December has already been priced in by the market.
If realized as expected, the $3,850 to $3,900 per ounce area for international gold prices has relatively strong psychological and technical support.
However, it should be noted that if oil prices get out of control again or inflation data rises more than expected, international gold prices may trigger a deeper adjustment.
Gold jewelry retail prices fall in tandem
As gold prices fluctuate downward, retail prices per gram of major domestic gold jewelry brands have also fallen sharply in tandem, with declines from this year's highs exceeding 500 yuan per gram.
Taking the quotation on November 1 as an example, Chow Sang Sang's pure gold jewelry was 1,161 yuan per gram, down 547 yuan per gram from this year's high; Chow Tai Fook quoted 1,168 yuan per gram, down 538 yuan; Lao Feng Xiang quoted 1,165 yuan per gram, down 548 yuan.
Consumers' enthusiasm for buying gold has been further ignited.
On November 1, a reporter observed at the Shenzhen Shuibei gold and jewelry market that foot traffic was heavy, with many wholesalers and tourists making special trips to "hunt for goods."
A screen in the Shuibei gold and jewelry market showed that the day's jewelry gold price was quoted at 990 yuan per gram.
Many gold jewelry shops in the Shuibei gold and jewelry market have recently seen significant sales growth.
Wu Xiao, a staff member at a gold jewelry retail store in Shuibei International Commercial Building, told reporters: "We are now in the traditional peak consumption season. Our store has not only seen a clear increase in sales of large-weight gold jewelry for weddings such as 'three golds' and 'five golds,' but some small-weight products for self-pleasing purchases are also selling very well. As gold prices fall, wholesalers and individual consumers have recently rushed to place orders and pick up goods."
Bai Wenxi, chairman of Zhonghe Kunlun (Beijing) Asset Management Co., Ltd., said in an interview: "The sharp pullback in gold prices, combined with the wedding peak season, has brought a positive stimulus to the gold jewelry consumer market, and market transactions are active. Facing gold price fluctuations, gold jewelry brands should do a good job in inventory management, while making good use of financial tools such as gold leasing and futures hedging to control high-priced inventory exposure, accelerate turnover, and smooth the impact of price fluctuations on operations."
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