Gold prices have reached their lowest point this year. On June 6, a trending topic highlighted that the price of gold has fallen back to levels last seen in 2025. Inquiries at several gold retailers in Zhengzhou revealed that prices for some domestic brand gold jewelry dropped by nearly 40 yuan per gram overnight, essentially bringing the price back to where it was at the end of 2025.
Brand Gold Jewelry Falls Nearly 400 Yuan Per Gram from Yearly Peak
On the international front, as of the close on June 5, spot gold was trading at $4,328.92 per ounce, down 3.25% for the day, having erased its year-to-date gains at one point during the session. COMEX gold futures fell 3.35% to $4,353.90 per ounce, down 1.62% year-to-date. Spot silver plunged 8.09% to $67.885 per ounce, while COMEX silver futures dropped 8.08% to $67.995 per ounce, marking a 5.5% decline so far this year.
For major domestic gold brands, the price for Zhou Dafu pure gold jewelry was quoted at 1,323 yuan per gram, down 37 yuan from the previous day's 1,360 yuan. Chow Sang Sang was quoted at 1,315 yuan per gram, a decrease of 39 yuan from 1,354 yuan. Lao Feng Xiang was quoted at 1,316 yuan per gram, down 36 yuan from 1,352 yuan.
International gold hit its peak for the year on January 29, closing at $5,535.6 per ounce. Domestic gold jewelry retail prices followed suit, with prices for Lao Miao Gold, Chow Sang Sang, and Lao Feng Xiang reaching 1,722 yuan, 1,708 yuan, and 1,713 yuan per gram respectively that day. Compared to these yearly highs, the per-gram prices for these three brands have now fallen by 401 yuan, 393 yuan, and 397 yuan respectively.
One consumer expressed surprise and some regret, noting that if she had purchased over 30 grams of gold jewelry on June 6 instead of May 5, she could have saved nearly 5,000 yuan, given the sharp decline over the past month.
For gold investors, the price drop has led to varied reactions, with some cutting losses and exiting, while others see an opportunity to add to their positions. One investor shared that they missed the chance to sell for a 40,000 yuan profit, later refused to sell at a 20,000 yuan loss, and ultimately had to sell at a loss of 86,000 yuan. Conversely, another investor, optimistic about the market outlook for July, has already increased their holdings.
Discussions about gold prices are lively on social media, with opinions divided. Some users advise treating gold as an asset allocation tool rather than a short-term speculative play, while others have decided to sell and stay out of the market regardless of future movements. Concerns are also being raised about the potential for gold to test the $4,000 support level.
Some Institutions Lower Near-Term Gold Price Forecasts
What is behind the sudden and sustained decline in gold prices? Industry insiders attribute the recent drop to a combination of factors, including heightened expectations for U.S. Federal Reserve interest rate hikes, a stronger U.S. dollar, rising U.S. Treasury yields, a cooling of safe-haven demand, and profit-taking by investors.
On the news front, the U.S. Bureau of Labor Statistics released the May employment situation report on the evening of June 5. It showed that non-farm payrolls increased by 172,000 month-over-month, with the private sector adding 120,000 jobs and government adding 52,000. The unemployment rate held steady at 4.3%, continuing to oscillate within a narrow range of 4.3% to 4.5% since July 2025, indicating the U.S. labor market's resilience once again exceeded market expectations.
According to data from CME Group's FedWatch Tool, following the jobs report, market-implied probability of a Fed rate hike in December has risen to approximately 70%, up from around 50% before the data release.
Bart Melek, Global Head of Commodity Strategy at TD Securities, commented that the non-farm payrolls data significantly surpassed market expectations. Given the ongoing conflict in the Middle East, elevated energy prices, and significant inflationary pressures, the Fed has little appetite for rate cuts. In this context, the cost of holding gold is becoming increasingly high.
The Outlook for Gold Prices
Morgan Stanley, at the end of April, revised its gold price target for the second half of 2026 down to $5,200 per ounce, significantly lower than its previous forecast of $5,700. The downgrade was attributed to geopolitical tensions pushing up real interest rates and delayed Fed rate cuts, leading to a return of the classic negative correlation between gold and real interest rates.
JPMorgan Chase has reassessed its 2026 average gold price forecast from $5,708 per ounce to $5,243 per ounce. Its report noted that the precious metals market has recently entered a period of wait-and-see, with a noticeable cooling in investor interest, though it maintains a fourth-quarter 2026 target price of $6,000 per ounce.
A Ping An Securities research report pointed out that looking ahead to June, gold is expected to maintain a volatile trend against the backdrop of a rising oil price floor and gradually emerging overseas inflationary pressures. Global central banks resumed increasing their gold reserves in April, with the Polish central bank remaining the largest buyer, while the Chinese central bank continued its streak of purchases for the 18th consecutive month. Reviewing May, gold prices faced pressure due to overseas inflation concerns. In the short term, geopolitical tensions in the Middle East are lifting the oil price floor, and overseas inflationary pressures are gradually materializing, which may put some pressure on gold prices. In the medium term, the deepening U.S. fiscal issues and the weakening status of the U.S. dollar's credit suggest that gold's long-term pricing framework remains unchanged, supporting a positive outlook for its medium-to-long-term upward trend.
Industry professionals suggest that for ordinary investors, allocating approximately 10% of their portfolio to gold is a prudent strategy, with the allocation ratio controlled between 5% and 15% of household assets, using long-term idle funds for investment. In the current environment of sharp gold price fluctuations, it is advisable to build positions gradually and control exposure.
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