Last week, under the dual impact of fading geopolitical risk aversion and easing international trade tensions, the international spot gold price experienced a “Waterloo”, plunging over $90 per ounce in a single week, with a weekly decline of nearly 3%. However, the domestic gold sales market in China continued to “cool off”. Business owners in Shuibei Market in Shenzhen generally reported that recent gold sales had decreased by 30% to 40% compared to when gold prices were rising, indicating a strong wait-and-see sentiment among consumers. The topic once again became a hot search item.
Gold, as a global safe-haven asset, has shown exceptionally strong performance in the past three years. According to statistics from Tonghuashun, since 2023, the spot gold price has risen by over 80%. This year, it surged from an opening price of $2,623 per ounce to $3,499.45 per ounce on April 22, marking a peak increase of over 30% and reaching a historical high.
However, last week’s market trend cast doubt on this previous strength. The international spot gold opened last week at $3,373.09 per ounce, reaching a high of $3,393.09 per ounce. Due to the ceasefire in the Iran-Israel conflict following US military intervention, combined with the easing of US trade tensions, the waning of safe-haven demand exerted pressure on gold prices. By the closing bell last Friday (June 27) in New York, spot gold fell by 1.62% to $3,274.15 per ounce, accumulating a 2.78% decline for the week.
The drop in gold prices weakened its short-term safe-haven appeal, leading some funds to shift towards the stock market or commodities.
Faced with the sudden sharp decline in gold prices, Chinese consumers generally maintained a cautious attitude. According to a report on Sina Finance, Shuibei merchants in Shenzhen commented that despite gold prices dropping to a new low in June (such as Chow Sang Sang’s 18K gold falling from 1,038 yuan/gram to 985 yuan/gram), sales did not increase but instead decreased. Many investors are worried about “buying the dip halfway up”, preferring to wait for further price drops.
Some netizens even stated outright: “I will only buy when it drops to 600 yuan/gram.” This “chase-the-rise” mentality clearly resulted in panic buying at high prices and lagging demand during declines. Although some merchants proactively reduced labor costs (by 10-20 yuan/gram), the impact on the total price was negligible since labor costs only account for 1%-2% of the gold price, limiting the promotional effect.
In mainland China, gold is not only a must-have for weddings and a preferred gift but also a traditional investment option for the public. In recent years, a large number of DIY tutorials and sharing content for gold bracelets, rings, and bracelets have emerged on mainstream social platforms, showcasing the popularity of gold jewelry among young people.
However, experts maintain a cautious attitude towards the value preservation and appreciation function of gold jewelry. The Deputy Dean of Jiangsu Financial Research Institute, Jiang Zhaoyi, who has long been concerned about international gold price trends, emphasized in a recent report by Nanjing Daily that with gold prices at historical highs, achieving value preservation and appreciation through the purchase of gold jewelry is “difficult to realize”.
He stressed that, “Gold jewelry can be purchased as needed, but the value preservation and appreciation of physical gold are not easily realized, especially with the risk of gold price fluctuations.”
Since opening at $2,623 per ounce, gold has been on a continuous rise. As of 11 am on June 30, the spot gold price was quoted at $3,280 per ounce.
Looking ahead, major financial institutions on Wall Street have divergent predictions regarding the future trend of gold. JPMorgan Chase’s view is the most optimistic, forecasting that the gold price will reach $6,000 per ounce in 2029. Goldman Sachs, in its latest report, also holds an optimistic outlook, expecting the gold price to climb to $3,700 per ounce by the end of 2025 and further rise to $4,000 per ounce by mid-2026 in the “base scenario”.
In contrast, Citibank is relatively cautious, predicting that the gold price will peak at $3,100 to $3,500 per ounce in the third quarter of this year and gradually decline. It is expected to fall to the range of $2,500 to $2,700 per ounce by the second half of 2026, representing a decline of approximately 20% to 25% from the current forward price.
It is worth noting that against the backdrop of soaring gold prices, global central banks continue to increase their gold reserves, with China being one of the main countries increasing its reserves. As of the end of May this year, the People’s Bank of China’s gold reserves stood at 73.83 million ounces, increasing by 60,000 ounces month-on-month and marking seven consecutive months of growth.