A few days ago, the topic of "gold prices fell to a nearly one-month low" appeared on the hot search, causing widespread attention and discussion. It is understood that during the "May Day" holiday, affected by multiple factors such as the decline in international gold prices and holiday promotions, the gold market has experienced a wave of "roller coaster" market, and the gold quotation of many brands has returned to the "5" prefix. With the soaring gold price "hitting the brakes", what is the current situation in the gold market? The reporter conducted a visit and investigation.
The market was volatile and the gold price generally fell
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. Just two weeks ago, however, gold's booming market took a sharp turn. Gold closed at $2,315.8 an ounce in New York 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, the price of AU99.99, which is more active in 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.
On May 12, the reporter visited the gold store and found that the price of jewelry gold has also generally fallen due to the decline in international gold prices, and the price of jewelry gold in some gold stores has fallen to below 700 yuan per gram after superimposed discounts, and even the gold gram price of jewelry of some gold jewelry brands has come to the beginning of "5". On the 12th, the gold price of China Gold was 599 yuan/gram, and the gold price of Baoqing Yinlou was 589 yuan/gram. "I bought a gold bracelet for 730 yuan/gram, and only gave me 45 yuan per gram at that time, and today I saw that the price of gold has dropped a lot, and I feel that I may have bought it at the highest point, and I really shouldn't have started so early." Ms. Wang, a consumer, told reporters.
On the 12th, the gold price of Lao Fengxiang was 722 yuan/gram, the gold price of Zhou Shengsheng was 699 yuan/gram, and the gold price of Lukfook jewelry was 723 yuan/gram. "Generally speaking, the gold price of a brand is much higher than the international gold price, because it includes surcharges such as store rent, employees' salaries, and jewelry craftsmanship." Lukfook jewellery sales staff told reporters that compared with before, the current gold price is already very cost-effective, Lukfook jewellery from Mother's Day to "520" period has a discount, gold can be reduced by 52 yuan per gram, only 600 yuan per gram in hand. The reporter found during the visit that the temporary decline in the price of jewelry gold attracted many consumers to buy, coinciding with Mother's Day and the upcoming "520", the offline stores of gold brands ushered in a new wave of consumption boom. "Recently, the customer flow in the store has increased a lot compared with the past, and most of the consumers who come to buy are just needed users who are married or have gift needs." The sales staff of the Baoqing Yinlou store told reporters.
It is in a bull market and prices will rise in the short term
Industry insiders told reporters that despite the recent pullback in gold prices from record highs, in the short term, gold prices still have the potential to rise. Some analysts believe that factors such as global interest rate cut expectations, geopolitical risks, and central bank gold purchases will all boost the price of gold. Therefore, even if the price of gold is currently in a volatile market, in the short term, gold is still in a bull market.
"The current upside in gold prices is driven by two factors. On the one hand, at present, major foreign economies are still facing relatively high inflation, and the price of gold, as a tool to hedge against inflation, has naturally risen. On the other hand, after the end of the epidemic, major foreign economies have adopted high interest rate policies to cope with inflation, but they are now facing the risk of slowing economic growth, and it is very likely that the benchmark interest rate will be lowered in the second half of this year. In this case, gold, as an asset with strong financial attributes, is an important allocation for consumer investment. After the benchmark interest rate is lowered, the opportunity cost of holding gold will be relatively reduced, and consumer demand for gold will rise, which will push gold prices upward. Chen Wei, a doctor of economics from Virginia Tech University and an associate professor at the School of Finance of Nanjing University of Finance and Economics, said that in addition to the real demand for gold in these two aspects, there are also a large number of speculative traders in the market who hope to obtain trading gains by buying low and selling high, and these large speculative transactions have also played a large role in driving the price of gold up.
According to data released by the World Gold Council, in the first quarter of 2024, the mainland's overall domestic gold demand reached 343 tonnes, up 3% year-on-year. Bars and coins were the main engine of demand growth in Q1, with investment demand reaching 110t, up 68% y-o-y and the strongest Q1 since 2013. According to data released by the China Gold Association, in the first quarter of 2024, the national consumption of gold jewelry was 183.922 tons, a year-on-year decrease of 3%. Talking about the reasons for the differentiation, the China Gold Association analyzed that the rise in gold prices will lead 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 will even suspend work and take holidays. In contrast, bar and coin consumption at relatively low premiums are more favourable to consumers with physical gold investment needs.
The heat is rising, and investment still needs to be cautious
Entering 2024, compared with the purchase of precious jewelry such as diamonds and jade, gold jewelry is becoming the mainstream of contemporary consumption, and the audience of gold-related products has also expanded from "post-70s" and "post-80s" to "post-90s" and "post-00s". Nowadays, consumers' enthusiasm for gold investment is high, and the channels for buying and selling gold have also undergone earth-shaking changes, buying and selling gold is no longer limited to brand stores, banks, Shuibei purchasing agents, online live broadcast rooms, Xianyu and other trading platforms are within the scope of consumers' consideration.
It is understood that the gold business in the online live broadcast room has been booming recently, and on the Douyin platform, there are nearly 80 accounts with the word "China Gold" in their names and "China Gold" Logo in their avatars, of which more than 60 have blue V certification marks. In addition, gold trading on second-hand trading platforms such as Xianyu is also taking shape. Red Bolin data shows that in recent months, the second-hand gold trading on the Xianyu platform has risen significantly, especially in March this year, with sales increasing by 62% month-on-month and the number of goods on the shelves increasing by 118% month-on-month.
At present, consumers are enthusiastic about buying and investing in gold, in this regard, Chen Wei suggested that if the purchase of gold is used as a family's financial allocation, or as a gift to relatives and friends, to express emotional sustenance, in the case of a purchase scale is not very large, consumers do not need to worry too much about the rise and fall of prices. If the purchase of gold is used as a long-term financial allocation, investors need to pay attention to the risks behind gold financial management. Although gold has the potential to increase steadily in the long term as a tool against inflation, price fluctuations around value are the norm and investors should be expected and prepared for this. When involved in gold investment, it is necessary to remain rational and cautious, and formulate a reasonable investment strategy based on personal risk appetite. When choosing gold investment products, the liquidity and investment threshold of the products are factors that cannot be ignored. However, in general, gold investment is less risky than investments such as stocks, and as a hedge against inflation, it can resist some market risks for investors.
Jiangsu Economic News reporter Shen Yuqing
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