Spot gold experienced choppy trading on the 25th, with the price at $3,985.070 per ounce at the time of writing, marking a decline of 0.17%.
The significant drop occurred on the 24th, as spot gold fell sharply, breaching the $4,000 per ounce level during the session. It closed the day at $3,991.7 per ounce, down nearly 3%. This represents a retreat of approximately 30% from the historic high recorded earlier this year at $5,598.750.
This decline has directly impacted domestic gold jewelry prices. Following the international market, prices for branded gold jewelry in China have been adjusted downwards. For some brands, the per-gram price has fallen by close to 500 yuan from the peak seen at the start of the year.
A check on the 25th revealed that gold jewelry from Chow Sang Sang was priced at 1,221 yuan per gram, a single-day drop of 19 yuan. Over two days, the cumulative decline reached 49 yuan, bringing the price 487 yuan lower than the year's high. Similarly, jewelry from Lao Feng Xiang was listed at 1,215 yuan per gram, falling 26 yuan in one day and 53 yuan over two days, which is 498 yuan below its peak price from the beginning of the year.
What Lies Ahead for Gold?
A senior investment strategist at DBS Bank (China) previously explained that the primary reason for the drop in gold prices is the expectation of interest rate hikes triggered by U.S. inflation. While inflation appears moderate, tail risks stemming from factors like rising capital expenditures and debt are prompting central banks globally to adopt preemptive, defensive rate hikes, which in turn suppresses the price of gold.
A precious metals researcher at Galaxy Futures noted that while the Federal Reserve's June FOMC meeting kept interest rates unchanged, the dot plot indicated a potential rate hike in 2026. The hawkish stance of Fed Chair Waller has increased market expectations for a rate hike before the end of the year. This has pushed up the U.S. dollar index and 10-year Treasury yields, putting pressure on the valuation of precious metals. Concurrently, stronger-than-expected U.S. non-farm payrolls and inflation data for May have reduced the Fed's necessity for monetary easing. Although falling oil prices might alleviate future imported inflationary pressures, the current absolute level of inflation continues to support a hawkish policy stance.
In a morning commentary on the 25th, Shenyin & Wanguo Futures expressed a view for the medium to long term, stating that precious metals have a foundation for a sustained upward trend in their price center. The reasoning includes a structurally elevated level of global geopolitical risk, ongoing restructuring of the political and economic order, intensifying U.S. fiscal pressures, and the continued advancement of de-dollarization. The trend of global central banks increasing their gold reserves is also expected to persist. Metals like silver, platinum, and palladium, which possess both financial and industrial attributes, generally move in line with the broader precious metals sector. However, unlocking their full upward potential depends on support from industrial demand.
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