Since mid-May, international gold prices have been under sustained pressure, declining below the $4,500 per ounce mark. According to Wind data, the spot price of London gold fell to a low of $4,453 per ounce on May 20, marking a new low since March 31. Compared to the historical high of nearly $5,600 per ounce in January this year, the price has 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 for monetary policy. According to the latest data from the U.S. Labor Department, the Consumer Price Index (CPI) in April rose by 3.8% year-on-year, while the core CPI, excluding food and energy, increased by 2.8% year-on-year, both exceeding market expectations. The Producer Price Index (PPI) also saw a significant rise, climbing 6.0% year-on-year in April, the highest level since December 2022.
These figures have heightened concerns about persistent inflation, directly dampening market 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 of gold has increased significantly, leading to reduced investment demand and directly weighing on gold prices.
Furthermore, multiple short-term negative factors have exacerbated the correction. India, the world's second-largest gold consumer, raised its gold import tariff from 6% to 15% starting May 13, directly suppressing physical gold demand. Additionally, the prolonged high prices have accumulated substantial profit-taking positions. Catalyzed by negative news, concentrated selling at elevated levels has intensified, deepening the decline in gold prices.
How long will this adjustment last? In the short term, the strong U.S. dollar and elevated Treasury yields are unlikely to change quickly, suggesting that gold prices may remain under pressure. However, from a medium- to long-term perspective, the underlying support for gold prices remains intact.
Currently, global central banks' demand for gold purchases remains robust. According to the World Gold Council's Q1 2026 "Global Gold Demand Trends Report," central banks globally added a net 244 tons of gold in the first quarter, exceeding both the previous quarter's level and the five-year average. Meanwhile, gold's role as a safe-haven asset and store of value continues to be highlighted. Coupled with a gradually widening supply-demand gap in the industry, these factors collectively form a solid medium- to long-term support base for gold prices.
It is noteworthy that while many institutions have lowered their short-term price forecasts for gold, they maintain a long-term bullish outlook. JPMorgan's latest precious metals research report indicates that the core factors supporting the long-term rise in gold have not fundamentally changed and may even be strengthened by the current geopolitical landscape.
For individual investors, it is essential to view gold price fluctuations rationally and avoid blindly chasing declines, attempting to time the bottom, or engaging in heavy speculative positions. Investors should also consider their risk tolerance and investment horizon to appropriately allocate gold within their personal asset portfolios.
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