In late May, a significant shift occurred in China's domestic gold consumption market. The previously surging buying frenzy has notably subsided, and market sentiment has cooled considerably. Gold stores that were once bustling with crowds and long queues have become quiet and deserted, as the nationwide wave of stockpiling gold has completely receded.
Recent visits to several high-end gold retailers and brand stores in Beijing's core commercial districts revealed that, following this round of sharp price increases and subsequent correction, offline gold consumption activity has dropped significantly. Consumer attitudes have shifted from previous blind trend-following to a more cautious and wait-and-see approach.
According to the latest "Investor Sentiment Survey Report" released by Cheung Kong Graduate School of Business, the willingness of residents to increase gold holdings has continued to decline due to the price correction. Coupled with changes in the global macroeconomic environment and the temporary failure of traditional safe-haven logic, sentiment towards gold consumption and investment has fully returned to rationality.
The spectacle of long queues outside stores is now a thing of the past. For a long time, Lao Pu Gold's offline stores have been a significant barometer for China's gold consumption and investment market, serving as a "weather vane" for observing gold consumption trends.
In the past, whenever global geopolitical tensions escalated or capital market volatility increased, safe-haven demand would rise, leading to long queues outside stores across the country. Many consumers would rush to purchase gold bars and jewelry for value preservation and collection purposes. Some would even wait overnight to buy, and scalpers reselling queue numbers for profit were common, with market heat remaining consistently high.
Back then, the queueing phenomenon was not only a direct reflection of robust gold consumption but also highlighted a widespread public mentality of chasing gold and viewing it as a "sure-win asset." It served as an important window into understanding residents' consumption willingness and asset allocation preferences.
However, as gold prices corrected, the market trend has quietly reversed.
Recent visits to several Lao Pu Gold stores in Beijing found that the previously crowded and lively scenes have completely vanished. In the Wangfujing commercial district, four adjacent Lao Pu Gold stores were quiet, with no queues or waiting customers. Very few customers were actively entering the stores to browse. Looking through the windows, the foot traffic inside was sparse and scattered. Multiple sales staff were attending to customers at a relaxed pace, a stark contrast to the previous scenes of crowded stores and overwhelmed staff.
Observation over nearly an hour revealed that in-store customers roughly fell into two categories: one group consisted of tourists and passersby simply browsing and admiring the designs, who would leave after brief inquiries about prices or trying on items; the other group had clear purchase intentions but became exceptionally cautious in their decisions. They would repeatedly compare styles, calculate total costs, carefully inquire about store loyalty points and promotional activities, and only make a decision after meticulous consideration. Impulse buying has decreased significantly.
When discussing the changes in store traffic and sales, a salesperson at a Wangfujing store acknowledged that following the brand's latest price adjustment in mid-February, which saw overall price increases of 20% to 30% for ancient-method gold jewelry and gem-set gold products, the queueing situation has diminished.
"Now, there's basically no situation of queuing up to buy. Store traffic is steady. Customers have more time to look at styles and select new products. The phenomenon of following the trend to stockpile has become rare. Although international gold prices have recently fallen, the store has not yet received notice of a retail price reduction. Products are still sold at fixed prices," the salesperson stated.
Simultaneously, it was observed in several purchasing agent groups that as gold prices declined, agents who had previously stockpiled large quantities began liquidating their inventory in bulk. They promoted sales with gimmicks like "selling at a discount before the price hike." Many previously hard-to-find popular styles are now readily available, including classic pendants like the filigree climbing gourd and the vajra pestle cross.
For example, a five-pronged vajra pestle pendant weighing 24.29 grams has a counter price of 49,030 yuan. An agent directly offered a 22% discount, bringing the actual purchase price down to 38,020 yuan.
A purchasing agent named Ji Ji explained that when the gold market was hot, popular gold jewelry was highly sought-after. Colleagues in the industry queued up to stockpile, hoping to profit from further price increases. Unexpectedly, gold prices turned downward, stores raised prices, and the market cooled instantly, making it difficult to sell the inventory on hand.
"Gold items are valuable. Having a large amount of stock ties up capital. Moreover, with every drop in the gold price, the inventory depreciates. After weighing the options, we had to forgo profits and quickly liquidate through discounts to recover the principal. Items can be shipped via SF Express with postage covered or picked up at the mall entrance. They can also be verified for weight and purchase records at Lao Pu Gold counters," Ji Ji said.
Furthermore, it was noted that her purchasing agent group's name had also been changed. The community originally dedicated to Lao Pu Gold purchasing has been renamed to focus on general mall discount services, no longer concentrating on gold purchasing, indicating a clear shift in business focus.
The fading speculative enthusiasm of retail investors and the accelerated capital outflow all reflect a shift in public preference for gold consumption and allocation.
Since 2025, international gold prices have experienced an epic surge. According to World Bank data, the gold price was around $2,710 per ounce in January 2025. It then rose continuously, soaring to $5,020 per ounce by February 2026. However, surprisingly, after the outbreak of the US-Iran-Israel conflict in late February 2026, gold, as a traditional safe-haven asset, did not continue its upward trend but instead turned downward, falling to $4,721 per ounce by April.
The latest issue of the "Investor Sentiment Survey Report" from Cheung Kong Graduate School of Business points out that behind the phenomenon of "gold failure" lies a temporary shift in market safe-haven logic.
Liu Jing, Professor of Accounting and Finance at Cheung Kong Graduate School of Business, analyzed that soaring energy prices have intensified inflationary pressures. Originally, the market expected the Federal Reserve to cut interest rates in 2026. However, facing rebounding inflation, the Fed was forced to maintain a "higher for longer" high-interest-rate policy. The market has even begun to reassess the possibility of rate hikes.
"As a non-yielding asset, when US Treasury yields rise significantly due to expectations of high interest rates, capital flows towards the US dollar and US Treasuries that can generate higher interest, leading to the selling of gold. Data supports this inference. From January 2025 to January 2026, due to rising expectations of rate cuts, the yield on the US 1-year Treasury note fell from 4.2% to 3.5%. However, by April 2026, with inflation reigniting, this yield quickly rebounded to 3.7%. The US dollar index followed a completely identical pattern of first declining then rising," Liu Jing further explained. From January 2025 to January 2026, the US dollar's effective exchange rate indices against developed economies and emerging economies fell sharply by 9.7% and 7%, respectively. By April 2026, compared to the lows in January, these two indices had risen by 1% and 0.3%, respectively.
Regarding market sentiment, Liu Jing pointed out that the net proportion of investors willing to increase gold investment has dropped to 12.6%, a decrease of 1.6 percentage points from the previous period.
This indicates that ordinary investors have shed their mentality of blindly chasing rising prices. They no longer view gold as a "safe haven where you can buy with eyes closed and still profit." A wait-and-see sentiment clearly prevails.
"The sustained surge in gold prices earlier accumulated a large amount of profit-taking positions. Profit-taking at high levels is also one of the important drivers of this round of gold price correction. At the same time, the sharp rise in oil prices has increased profit expectations for energy-related investments like oil and gas, attracting capital to flow out of gold and into these assets with higher short-term returns, further exacerbating the decline in gold prices," Liu Jing analyzed.
According to statistics from the World Gold Council, in March 2026, within the total gold demand, demand for gold bars and coins, representing physical investment demand, increased by 10.7% month-on-month and 42% year-on-year. Demand from central banks and official institutions, representing reserve demand, increased by 17.3% month-on-month and 2.8% year-on-year.
In contrast, the category with the largest decline was gold ETFs and similar products, which fell by 64.6% month-on-month and 73% year-on-year. Additionally, affected by high gold prices, jewelry manufacturing demand also showed a significant decline, dropping by 23.5% month-on-month and 22.9% year-on-year.
"The simultaneous significant growth in physical investment and central bank gold purchases reflects deep-seated concerns among market participants about the future world situation and the US dollar credit system. The evolution of the world situation has clearly profoundly impacted investors' risk perception," Liu Jing stated.
In the view of Gao Chengyuan, Dean of the Tiaoyuan Influence Research Institute, the nationwide wave of gold stockpiling has experienced a temporary ebb. Gold jewelry consumption remains weak due to persistently high gold prices, and store traffic has returned to normal levels. However, this does not mean the gold market has returned to silence. Instead, the investment structure is shifting from being "driven by retail speculation" to being "led by institutional allocation."
"The consecutive seven months of net inflows into gold ETFs and the unchanged pace of central bank purchases indicate the market is moving from emotional speculation towards rational allocation," Gao Chengyuan predicted. In the future, the gold market is likely to present a normalized pattern of "investment demand providing a floor, while speculative heat cools down." The price center will move upward, but volatility will decrease, returning gold to its essential attribute as a portfolio diversification tool.
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