Recently, the price of gold suddenly took a nosedive, turning the trend from buying to selling. Some individuals managed to profit nearly 140,000 yuan by selling gold, while gold dealers are crying out in distress: the rapid drop caused them to lose 20,000 yuan overnight, leaving them with losses of hundreds of thousands.
On the evening of April 22, after soaring for over a month, the price of gold suddenly plummeted. That day, the international gold price fell by nearly 3%, dropping below the $2,350 mark, marking the largest single-day decline since February last year. Various mainland Chinese gold jewelry brands reduced their retail prices by around 14 yuan per gram, sparking discussions across social media.
On April 23, the spot price of gold continued to decline, breaking below the key level of $2,300 per ounce.
For gold dealers, the current situation poses risks in acquiring gold.
According to a report by Red Star News on April 25, Mr. Lin, a gold dealer in Hunan, stated that since March, the domestic gold prices had been steadily rising. After the recent decline in gold prices, not only were customers hesitant, but even dealers like him found themselves unable to profit from the higher prices. “Some customers inquired about selling gold upon hearing the news, but they couldn’t accept prices of 530 yuan/gram or 540 yuan/gram, and actual transactions did not significantly increase.”
Mr. Lin discovered early on April 24 that the gold he acquired the previous night resulted in a loss of over 20,000 yuan, with his overall losses reaching hundreds of thousands. Like many other gold dealers, he is now in a wait-and-see mode, hoping for a rebound before making further moves.
A gold dealer in Zhengzhou shared a similar experience, mentioning that on April 22, she purchased over 1000 grams of gold from customers at 556 yuan/gram, only for the gold price to drop rapidly to 555 yuan/gram, 552 yuan/gram, and 550 yuan/gram. “It dropped faster than the rates I offered to customers, and after a day of work, I ended up losing over 10,000 yuan on the gold I received.”
This dealer explained that they had been acquiring gold at lower prices as the gold prices steadily rose. With the continuous decline on April 23 and 24, if they still held onto inventory, they would lose approximately 20 yuan per gram.
However, the dealer believed that it’s normal for gold dealers to experience both gains and losses. “But previously, fluctuations of two to three yuan per gram were more common, while decreases of over ten to twenty yuan per gram were rare.”
Consumers who anticipate a rise continue to wait and observe, while those with a pessimistic view decide to cash in on their gold holdings. According to reports from Economic Daily News, a consumer in Guangdong sold 30 grams of gold jewelry on April 24, seizing the opportunity while the prices were relatively high to secure their assets.
Mr. Huang, the head of a gold recovery company in Shenzhen, stated that the gold price had dropped from the previous week’s high of 583 yuan/gram to 547 yuan/gram on April 24, resulting in a 35 yuan per gram decrease over the week. By midday on April 25, the price rose slightly to 552 yuan/gram compared to the previous day.
Following the recent decline in gold prices, banks saw a surge in their gold recovery business.
Mr. Huang further explained that in the past month, their store had many customers selling gold daily, with many of them selling gold bought during weddings or occasions. Some customers decided to sell off nearly a kilogram of gold jewelry all at once, cashing in over 200,000 yuan. “With the recent drop in gold prices, the trading volume has significantly decreased. We used to have around 10 transactions a day since March, but now we might only have two to three, returning to normal levels before the surge in gold prices.”
A resident from Nantong, Jiangsu Province, sold 250 grams of gold for nearly 140,000 yuan, generating a profit of over 30%. Multiple banks in Nantong have maintained high levels of gold repurchase transactions recently.
Associate Professor Liu Chunsheng from the Central University of Finance and Economics mentioned that the weakening speculative sentiment in the gold market and profit-taking from previous investments could be among the factors contributing to the decline in gold prices.
On April 25 and 26, the gold prices started to rise again. Industry insiders remind investors that the international gold prices have entered a phase of consolidation at high levels, advising caution for short-term bullish investors.