The price of gold has experienced a significant pullback, with London spot gold trading at $3,958.57 per ounce and New York futures gold at $3,971.90 per ounce as of the latest data. The precious metal has seen a single-day decline of up to 2.07%, continuing its recent downtrend and hovering near its yearly lows, having briefly fallen below the $4,000 per ounce mark. Compared to the historical peak of around $5,600 per ounce reached earlier this year, gold has now lost nearly 30% of its value year-to-date.
This sustained decline in international gold prices has had a direct impact on the domestic consumer market. Major Chinese gold jewelry brands have adjusted their prices downward. Lao Feng Xiang quoted 1,206 yuan per gram, a drop of 29 yuan from the previous day's 1,235 yuan. Chow Sang Sang's price was 1,213 yuan per gram, down 26 yuan. Chow Tai Fook offered gold at 1,208 yuan per gram, a decrease of 30 yuan, while Lao Miao Gold priced its gold at 1,212 yuan per gram, falling 25 yuan.
Banks Revise Forecasts and Tighten Controls
Amid the ongoing pressure on gold prices, several international investment banks have recently lowered their price targets for the metal. Concurrently, numerous domestic banks have moved to tighten their gold trading businesses. This rapid shift in market expectations has brought the question of whether gold has entered a cyclical turning point into sharp focus. Experts believe that while gold faces short-term adjustment pressure, views on its medium to long-term trajectory remain divided.
The market correction has prompted institutions to reassess their gold price projections. Citigroup has revised its three-month target from $4,300 to $4,000 per ounce. Commerzbank adjusted its year-end 2026 forecast down from $5,000 to $4,800 per ounce. Similarly, JPMorgan Chase lowered its average gold price forecast for 2026 from $5,708 to $5,243 per ounce.
Notably, Goldman Sachs, one of gold's staunchest bulls in recent years, has significantly cut its year-end price target from $5,400 to $4,900 per ounce in a recent report.
Industry experts view this collective downward revision by investment banks primarily as a repricing based on shifting policy expectations. Qu Rui, a senior associate director at Dongfang Jin Cheng's Research and Development Department, points out that the market consensus of "no rate cuts this year" is solidifying, influenced by the latest Federal Reserve signals and projections. This has led to higher real U.S. dollar interest rates, increasing the opportunity cost of holding non-yielding gold. The banks' target cuts are seen as a delayed calibration to this policy inflection point.
"The trend of consecutive net outflows from global gold ETFs, with trend-following capital exiting, has exacerbated the downward pressure, prompting banks to adjust their forecasts accordingly," Qu Rui further explained.
Data from the World Gold Council shows a moderate outflow of approximately $2 billion from global physically-backed gold ETFs in May. In China, gold ETFs ended an eight-month inflow streak, with total assets under management falling 5% to 289 billion yuan. Furthermore, holdings in the world's largest gold ETF, SPDR Gold Shares, dropped to their lowest level since mid-October last year as of early June.
Parallel to the international banks' actions, domestic banks in China are also enhancing risk management for their gold-related services.
Huaxia Bank announced an increase in the margin requirement for its代理 personal silver deferred settlement (Ag(T+D)) contracts from 42% to 120%, effective after the close on a specified date. Guangfa Bank declared its intention to fully suspend its代理 personal precious metals trading business for the Shanghai Gold Exchange by the end of June. Similarly, China Construction Bank stated it would关闭 the functionality for its代理 personal precious metals trading business on the same exchange in late July.
Debate Over Gold's Trajectory Intensifies
The coordinated actions by institutions to adjust expectations and strengthen controls have further fueled debate over gold's future path.
Zhao Qingming, Vice President of the Hui Guan Research Institute and an international finance expert, stated that from a technical analysis perspective, gold prices have indeed reached a cyclical inflection point. "After hitting a high near $5,600 per ounce early this year, London spot gold has been in a sustained decline, now around $4,000. The chart pattern shows it has entered a downward adjustment channel following the record high."
However, there is no unanimous judgment within the industry on whether this adjustment signifies the end of gold's long-term upward trend.
Qu Rui believes the current correction is more akin to a short-term valuation adjustment rather than a termination of the long-term bull market. "In the short term, policy headwinds have not been fully priced in, and the downtrend is established for this phase. But in the long run, the core logic supporting higher gold prices has not fundamentally changed."
He emphasized that U.S. dollar real interest rates remain the core variable influencing gold prices. While the repricing of Fed policy expectations is weighing on gold's short-term valuation, long-term supportive factors like persistent central bank gold buying have not altered.
Looking ahead, Qu Rui expects gold prices to follow a pattern of "seeking a bottom in the third quarter and recovering in the fourth quarter" this year. He anticipates the adjustment to continue into Q3, with a potential valuation recovery in Q4, possibly bringing prices back to a range of $4,500 to $4,700 per ounce by year-end.
Zhao Qingming, on the other hand, identifies three core variables affecting gold prices: geopolitical risks, global central bank gold purchases, and monetary policies of major economies. He asserts that the fundamental pricing logic for gold remains intact. "Technically, there is still room for further short-term adjustment, with prices potentially seeking support around $3,800 per ounce within the year. The subsequent trajectory will still depend on changes in the aforementioned factors," he concluded.
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