Recently, the sharp rise and fall of gold prices has affected the nerves of the market. As the gold price is still high and the wait-and-see sentiment is accumulating, some gold shops reported that the overall sales of gold jewellery were relatively flat during the May Day period, despite the strong promotional efforts. What is the future of gold prices? The journalist investigated.
Gold prices remain elevated
Since March, the international gold price has risen like a rainbow, and the gold price in the New York market has risen from less than $2,200 per ounce to more than $2,400, an increase of more than 10%.
However, just two weeks ago, gold's "hot" market took a sharp turn. Gold closed at $2,315.8 an ounce in the New York market on May 8, down 5.4% from its all-time high in April.
As a result, the price of renminbi-denominated gold has also fluctuated significantly. Since late April, AU99.99, which is more active in gold spot trading on the Shanghai Gold Exchange, has continued to fluctuate and fall, closing at 543.43 yuan per gram on May 9, down 5.8% from the historical high of 576.99 yuan per gram in April.
"Gold prices have fluctuated sharply in previous years, but not as drastically as recently." Xu Zhiyan, assistant general manager of Huaan Fund and manager of gold ETF fund, told reporters.
Despite the sharp reversal in gold prices, it remains at a high level. In the four trading days after the May Day holiday, the closing price of AU99.99 on the Shanghai Gold Exchange remained above 540 yuan per gram, up 20% from the same period last year and 13% from the beginning of this year.
This can be seen in the price of gold jewellery. The reporter visited and learned that on May 9, the price of pure gold jewelry in a Chow Tai Fook store in Beijing was 710 yuan per gram, which was a certain drop from the high point of more than 730 yuan per gram in April. Despite this, it is still 21.4% higher than the quotation of 585 yuan per gram in the same period last year.
In recent years, the bank accumulation fund business has been favored by some young gold investors due to its low investment threshold (the smallest business unit is 1 gram), flexible operation, and the ability to purchase a small amount of money multiple times to share the cost.
Since the price of gold rose in March this year, many banks have raised the starting point of their accumulated funds. For example, the Agricultural Bank of China announced on April 9 that it would raise the starting point for regular investment in Deposit Pass No. 2 from 550 yuan to 600 yuan. Since May 1, the Postal Savings Bank of China has dynamically adjusted the purchase threshold of gold accumulation business according to the gold market conditions, and the adjusted starting point amount is higher than the average closing price of the AU99.99 contract on the Shanghai Gold Exchange in the previous natural month.
Industry insiders remind investors to grasp the rhythm of accumulation and prevent risks caused by large fluctuations in gold prices.
The consumer market is fragmented
"During the long holiday, gold jewelry in gold stores can be reduced by up to 60 yuan per gram, which is much cheaper than before the holiday." Miss Wang, who bought a gold pendant at the Chow Tai Sheng Gold Store in Shanghai, told reporters.
When the reporter visited, many gold stores launched promotional activities during the "May Day" period, but some merchants said that the consumption of gold jewelry was relatively light.
In Shenzhen's Shuibei Market, a number of shopkeepers told reporters that the retail and wholesale markets during the "May Day" period were lighter than after the Spring Festival. "The market is hot after the Spring Festival this year, and some wholesalers' shops are doing so well that they can't even crowd in. After April, the market turnover has declined. Zhengsheng jewelry marketing director Long Lilan said.
Compared with jewellery consumption, investment bar and coin consumption is still hot. According to data released by the China Gold Association on April 26, in the first quarter of 2024, the consumption of gold jewelry in mainland China was 183.922 tons, a year-on-year decrease of 3.00%; The consumption of gold bars and coins was 106.323 tons, up 26.77% year-on-year.
Liu Bao, manager of Guohua Jewellery's gold investment department in Beijing, said that during the May Day period, gold bar sales increased by 30% compared to the same period last year.
According to the analysis of the China Gold Association, the rapidly rising gold price has suppressed the consumption of gold jewelry to a certain extent, leading to increased sales pressure on gold jewelry retailers. The rise in gold prices has also led to an increase in the cost of raw materials and a decline in shipments of gold jewelry processing enterprises, and some small and medium-sized processing enterprises have even stopped work for holidays. In contrast, bar and coin consumption at relatively low premiums are favoured by consumers who need to invest in physical gold.
"Overall, the sharp rise and fall in the gold price has created a wait-and-see mood among some jewellery consumers." "If the gold price can continue to stabilise, I believe that jewellery sales will increase in the future." ”
More on long-term investments
Gold prices fluctuated sharply, and some investors who chased higher in the early stage began to suffer losses. "Bars bought in late April will have to wait at least a while before they see returns." Han Yu, a white-collar worker in Shanghai, told reporters.
There are also some investors who choose to sell their long-term gold bars for cash. "Taking advantage of the high gold price, we have recently sold investment gold bars purchased in 2019." Ms. Huang, who has invested in gold for many years, told reporters.
At the current node, for investors, is it "safe to be safe" or continue to increase?
Liu Richeng, futures and spot trading manager of Shandong Energy Group, said that the rebound in U.S. inflation data delayed the timing of the Fed's interest rate cut, and short-term investors took profits, resulting in a weakening of the short-term upward momentum of gold prices.
The latest data released by the U.S. Commodity Futures Trading Commission also shows that the speculative net long position in gold futures in the New York market has gradually retreated, indicating that investors' confidence in short-term bullishness is insufficient.
"Entering the second quarter, the higher gold price and jewelry consumption have entered the off-season, and the support of gold prices is not as strong as in the first quarter." Lu Weijia, trading director of Heraeus Precious Metals China, said.
Xu Zhiyan believes that the Fed will gradually enter a cycle of interest rate cuts in the future, global central banks will continue to buy gold, geopolitical risks are still continuing, and gold prices still have the potential to rise in the medium and long term.
According to the World Gold Council, global central banks bought a net 290 tonnes of gold in the first quarter of 2024, up 1% year-on-year. This is the highest quarterly figure since 2000, when quarterly global central bank purchases were available, and 69% higher than the five-year average quarterly central bank purchases.
According to a report released by the Office of the Chief Investment Officer of UBS Wealth Management on the 7th, global industrial demand for gold increased by 10% year-on-year in the first quarter, indicating that gold demand is resilient.
"For ordinary investors, investing in the gold market should be more based on long-term investment." Zhan Dapeng, director of non-ferrous metals research at Everbright Futures Research Institute, believes that in the long run, the correlation between the price trend of gold and other assets such as stocks is weak, and overseas investors often invest a certain proportion of their assets in gold, on the one hand, to play the role of gold as a store of value, and on the other hand, to use the volatility characteristics of gold and other assets to stabilize the income of the entire portfolio.
Source: Xinhua News Agency
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