Gold prices have been highly volatile in 2026, with the international market hitting a record high in late January before pulling back sharply, falling nearly 30% from its peak by mid-July. The metal, once hailed as a top inflation hedge, is now undergoing a deep market correction.
Domestic gold jewelry markets have mirrored this rollercoaster ride. Brand-name gold jewelry prices have dropped from above 1,700 yuan per gram at the start of the year to the 1,215-1,235 yuan range, with the gap between the year's high and low approaching 500 yuan per gram. Topics like "Afraid to buy after the drop" have trended on social media.
This week, international gold prices staged a rebound after consolidating at high levels, posting consecutive gains on July 21 and 22, closing at $4,077 and $4,130 per ounce, respectively. However, the trend reversed sharply only a day later, with spot gold falling 2% to $4,049 per ounce on July 23, and continuing to decline today. Data from the Sina Finance app shows that Chow Sang Sang gold jewelry is currently quoted at 1,227 yuan per gram, a sharp single-day drop of 31 yuan.
A field visit by this reporter to several gold and jewelry stores in Beijing revealed that the violent price swings have directly dampened consumer enthusiasm, with foot traffic remaining notably sparse. One store employee admitted, "Business has been flat recently. Gold consumption has always followed a 'buy on the rise, not on the fall' mentality. With such large price fluctuations, the shadow of the crash is still present. Most customers are watching, and buyers are still afraid."
During the visits, it was observed that counters for investment gold bars at multiple stores saw little to no customer inquiries or transactions. A gold merchant noted, "The number of consumers buying gold bars now has dropped by more than 50% compared to the beginning of the year. When prices were rising early this year, our gold bars were often sold out. Now, we have ample inventory in all sizes, but few investors are making a move."
Foot Traffic at Physical Gold Stores is Weak, Merchants Say "Most Customers Are Still Watching"
Since the start of 2026, the international gold market has experienced dramatic highs and lows. Gold prices repeatedly hit new highs earlier in the year, only to crash sharply after breaking through the all-time peak of $5,598 per ounce. On January 30, spot gold fell more than 12% in a single day, breaking below $4,700 per ounce, marking its largest single-day drop in 40 years.
According to Wind data, after peaking at $5,598 per ounce in late January, international gold prices weakened continuously through the first half of 2026, falling below the $4,000 mark by mid-to-late June. This represented a drop of over $1,600 from the peak, a near 30% retracement, erasing all gains for the year and bringing prices back to November 2025 levels.
Entering July, gold prices saw a phase of rebound after high-level consolidation. They rose sharply on July 21 and 22, closing at $4,077 and $4,130 per ounce, respectively. But this did not mark the start of an uptrend. Just one day later, on July 23, spot gold tumbled 2% to $4,049 per ounce, and the decline continues today.
On July 1, the World Gold Council released its Mid-Year Outlook for the Global Gold Market for 2026, stating that after the volatility seen earlier this year, gold will enter a critical phase in the second half, with its performance influenced by multiple uncertainties, including geopolitical risks, interest rate environment, and investor sentiment.
Today, a field visit by this reporter to several gold and jewelry stores in Beijing found that the dramatic reversal in gold prices has directly impacted consumer shopping enthusiasm. Overall foot traffic in physical stores was low, with very few people buying gold on a weekday. One merchant said, "Business has been flat recently. Traffic picks up a bit on weekday evenings or weekends, but the overall flow is still far behind what it was at the start of the year."
When asked about the reason, the merchant explained, "There's a long-standing psychology in gold consumption of 'buying on the rise, not on the fall'. With current price volatility still significant and the memory of the crash fresh, customers are asking more than they are buying. Most are still on the sidelines, and buyers are still afraid."
Some gold store brands are promoting "Today's event price: 1,088 yuan per gram" to attract customers, but very few stop to inquire. Many passersby glance at the poster and walk away. Major brands like Chow Tai Fook, Chow Sang Sang, and Lao Feng Xiang have more staff than customers in some locations. Other stores are offering additional incentives like workmanship fee waivers, trade-in subsidies, and limited-time discounts, but still struggle to retain customers and close sales.
Furthermore, during the visits, it was noted that the investment gold bar counters at several brand stores are almost completely empty. This contrasts sharply with the frenzy earlier this year when gold bars were frequently sold out. A gold store merchant revealed that the number of customers buying gold bars has shrunk by more than 50% compared to the peak at the start of the year. "Earlier this year, supply couldn't keep up with demand, and we were often out of stock. Now, we have ample inventory in all sizes, but very few investors are placing orders."
Sharp Gold Price Swings Not Beneficial for Brands Like Chow Tai Fook and Chow Sang Sang, Say Experts
Jewelry industry strategy expert Cui Deqian told this reporter that the current combination of "sharp rises and falls combined with high-level consolidation" is not a positive sign for brands like Chow Tai Fook and Chow Sang Sang. It implies a triple pressure overlay:
"The first pressure is inventory mark-to-market losses and capital tied up in stock. When gold prices plummet, merchants who stocked up at high prices incur significant paper losses. To hedge against future price volatility, brands are forced to hold more inventory, straining their cash flow. The second pressure is the abnormal consumer phenomenon of 'watching more as prices fall'. The fundamental reason is that consumers are shifting their money from 'gold jewelry' to 'gold bars', with the investment attribute cannibalizing the consumption attribute. The third pressure is on the franchisee system, with declining same-store sales. Franchisees face a double squeeze from 'weak downstream consumer demand' and 'low restocking willingness', leading them to generally adopt a destocking strategy. For brands that rely heavily on franchising, this is the most direct erosion of channel profits," he said in a detailed analysis.
Cui Deqian stated bluntly, "Many people think that 'rising gold prices mean gold stores profit', which is a misconception. Gold stores make money on workmanship fees and brand premiums, not on the gold price itself. When gold prices fluctuate violently, that's actually when gold stores suffer the most. Prices that are too high suppress consumption, and prices that fall too fast eat into inventory profits."
Industry data supports this assessment. According to incomplete media statistics, major listed gold jewelry brands saw a sharp reduction in their store counts in the first quarter of 2026. Brands like Chow Tai Fook, Chow Tai Seng, and Lao Feng Xiang closed nearly 1,000 stores combined in the first quarter, suggesting a systemic shakeout among top gold jewelry brands.
On July 23, Chow Tai Fook Jewellery Group released its unaudited operational data for the three months ending June 30, 2026, the first quarter of its fiscal year 2027. In this quarter, Chow Tai Fook opened 14 new Chow Tai Fook jewelry retail points in mainland China while closing 272, resulting in a net decrease of 258. As of the end of June, the number of Chow Tai Fook jewelry retail points in mainland China fell to 5,047, of which 69.4% were franchise stores.
Cui Deqian further analyzed that the collective "self-amputation" by top brands sends three clear signals:
Signal 1: A shift from "store quantity-driven" to "single-store profitability-driven". For the past two decades, the core strategy for gold jewelry brands was "expanding stores in lower-tier markets + riding the gold price uptrend", with a store network of tens of thousands acting as a moat. Now, however, the single-store profit model is collapsing, and low-efficiency franchise stores in fourth-tier cities are becoming profit black holes. For example, Chow Tai Fook mentioned "closing underperforming stores and opening high-productivity stores in core locations". This is not a contraction, but a proactive correction of past extensive expansion.
Signal 2: The essence of the industry shakeout is a battle for "pricing power". Lao Pu Gold has successfully proven a high-margin model using "ancient method gold + full direct operation + top luxury mall locations", showing all brands a path forward. The era of simply selling by weight plus workmanship fees is over. The future will be about premium derived from craftsmanship, culture, and intellectual property (IP).
Signal 3: K-shaped divergence is accelerating, with weaker players falling out. At one end of the spectrum, leading brands are pursuing a dual-track strategy of "self-amputation and high-stakes bets", closing inefficient stores, opening high-end ones, and promoting high-margin products. At the other end, tail-end companies like ST Cuihua are facing loan defaults of 951 million yuan, with core direct-sale stores ceasing operations, essentially exiting the market. The wave of store closures in the gold industry is far from over and will likely continue for the next two to three years.
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