Gold prices plummet! “One gram is 70 yuan cheaper”
The short-term plunge in international gold prices has attracted attention from all walks of life. On June 8, related topics topped the list of hot searches on Weibo.
On June 8, a reporter from China Securities Journal conducted an on-site visit to gold stores in Beijing and found that many gold stores offered generous discounts due to factors such as the sharp drop in international gold prices and Dragon Boat Festival promotions. Among them, Lao Fengxiang’s price dropped by 70 yuan per gram.
"Affected by the short-term decline in international gold prices, Lao Fengxiang's quotation fell by 20 yuan/gram in one day. In addition, there is a 50 yuan/gram discount during the Dragon Boat Festival holiday. Today's gold purchase price after the discount is 656 yuan/gram, which is 656 yuan/gram higher than yesterday's gold purchase price. It’s 70 yuan cheaper,” a salesperson at a Laofengxiang store in Beijing told reporters.
The reporter saw at the Laofengxiang store that the quoted price before the discount for pure gold jewelry was 706 yuan/gram, the quoted price for pure gold ornaments was 756 yuan/gram, and the quoted price for gold bars was 656 yuan/gram. At the early high point, the quotations of Lao Fengxiang's pure gold jewelry and pure gold ornaments were close to 800 yuan/gram.
In addition to Lao Fengxiang, reporters visited and found that brands such as Chow Tai Seng and China Gold generally offer greater gold discounts.
Among them, Zhou Taisheng’s quotation after discount is 588 yuan/gram, and China’s gold quotation after discount is 558 yuan/gram.
"The activity launched during the Dragon Boat Festival is a discount of 120 yuan per gram, and jewelry is 300 yuan back for every 1,000 yuan spent. The overall discount is relatively large." The person in charge of Zhou Dasheng's store told reporters.
However, reporters saw at the scene that the overall number of gold purchasers recently was relatively small.
"Now is the off-season for gold consumption, and there are not many gold buyers. The previous gold buying peak was around the May Day holiday, mainly for wedding groups. The next gold buying peak will have to wait until around the National Day holiday." China Gold Store personnel told reporters.
On June 8, COMEX gold futures fell 3.33% to US$2,311.2 per ounce.
On the news, with the release of non-agricultural data, market expectations for the Federal Reserve to cut interest rates have declined.
In addition, the People’s Bank of China ended its “18th consecutive increase” in gold reserves. The latest data released by the central bank showed that China's gold reserves at the end of May were 72.8 million ounces, the same as the end of last month.
Prior to this, the latest report released by the World Gold Council showed that the total gold purchases by central banks in April were 36 tons, a decrease of 3 tons from the previous month. Compared with the 290 tons of gold purchased by global central banks in the first quarter, the decline in gold purchases by global central banks in April was more obvious.
According to a research report from GF Securities, gold prices have risen significantly in the past two years. COMEX gold has continued to remain strong this year on the basis of a 13% increase last year. As of June 6, COMEX gold closed at $2,395.2 per ounce, up 16% this year.
Judging from the data on net gold purchases by global central banks, they will be 1,082 tons and 1,037 tons respectively in 2022 and 2023, significantly higher than the annual average level of 512 tons in the previous 10 years. Taking my country as an example, as of the end of April 2024, my country's central bank's gold reserves were at 72.8 million ounces, an increase of 60,000 ounces month-on-month, and have been growing for 18 consecutive months. There are two main purposes for global central banks to increase their gold purchases: first, to avoid the risk of over-reliance on U.S. dollar reserve assets; second, the weakening of the status of the U.S. dollar has led to the increased value-preserving ability of gold as a reserve asset.
Regarding the forecast for the future market, GF Securities believes that in the short term, gold prices do face certain technical resistance after the sharp rise in the early stage. In addition, as the Fed continues to fail to cut interest rates, the 10-year U.S. bond yield continues to rise, and gold may be bullish to stop profits. Leave the market and face correction pressure. However, in the medium to long term, the factors driving gold prices to rise show no signs of reversal.
Wen Bin, chief economist of Minsheng Bank, believes that during this round of surge, the relatively stable relationship between gold prices and some other variables has been broken. Issues such as the U.S. debt crisis, geopolitical risks, and central bank gold purchases have gradually become the main factors driving up gold prices. However, in the long run, there is no obvious correlation between these factors and gold prices. They are more of a periodic topic used by investment speculators to speculate.
Wen Bin said that while the gold market is still dominated by financial investment, it is foreseeable that after the periodic shock ends, the future gold price trend will most likely return to a series of long-term stable relationships. He predicts that, overall, if the price of gold rises above US$2,510/ounce during the year, investors will need to be extra cautious; if the price of gold breaks through US$2,600/ounce, the risk of a sharp decline will increase significantly.
