Year-to-date gains nearly wiped out! Gold plummets, Shuibei merchants: Many inquiries, few buyers

Gold Prices “Collapse”

Last week (March 16-20), international gold experienced an epic plunge, with London Gold spot prices falling a total of 10.49%, marking the largest weekly decline since March 1983.

On March 23, London Gold spot prices continued to decline, reaching a low of $4,318.83 per ounce, nearly erasing the year’s gains. As of press time, the year-to-date increase is only about 0.8%. On the same day, major gold brands lowered their prices: Chow Tai Fook reported 1375 yuan/gram, Chow Sang Sang 1370 yuan/gram, Luk Fook Jewelry 1373 yuan/gram, with daily declines close to 5%.

On March 23, the Shanghai Gold Exchange issued a notice on strengthening recent market risk control, stating that many factors have caused recent market instability, and gold and precious metal prices have become highly volatile. Members are advised to closely monitor market changes, prepare detailed emergency risk plans, and maintain market stability. Investors are also reminded to manage risks prudently, control positions reasonably, and invest rationally.

Gold prices plummeted—how is the gold sales market performing? Will the strong upward trend of gold come to an end?

Shui Bei: Some buy in, some watch, some regret buying early

“Gold prices have dropped, come stock up on gold bars!” Recently, several gold merchants in Shui Bei, Shenzhen, have been actively attracting customers on social media.

Around noon on March 23, Shui Bei gold prices were 1012 yuan/gram, down from 1046 yuan/gram on the 22nd.

A merchant in Shui Bei told Jiemian News that many customers visited the store over the past weekend. “Whether to buy or not mainly depends on each person’s psychological price point. Now, a little over 1000 yuan per gram matches many people’s expectations.”

Due to the sharp decline in gold prices over several days, some market participants are buying low, some are waiting, and others regret buying early.

A gold buyer told Jiemian News, “Recently, I’ve been buying wedding jewelry. I bought three gold pieces when prices were low last time. This weekend, seeing gold prices drop, I quickly bought 30 grams of gold at Shui Bei. Today, prices fell again, which is a bit frustrating, but since it’s for a wedding, I think I bought at a low point.”

“Some (customers) buy more as prices fall, others worry about buying at a high,” a merchant lamented.

Another merchant told Jiemian News, “Many people ask for prices, but few buy. With the current market, not buying is normal. Prices have fallen for so many days, everyone is just waiting a few more days.”

Additionally, traders generally prefer not to sell at low prices, and suppliers need to add a premium to purchase. “It’s hard to get supplies at original prices; you have to pay extra. Suppliers don’t want to sell cheaply,” a Shui Bei merchant said.

Notably, on March 18, the Shenzhen Gold and Jewelry Industry Association issued a proposal to regulate business practices in the Shenzhen gold industry. The proposal states that large transactions over 20,000 yuan must be registered with real names, and the bank account name must match the ID of the buyer.

A merchant told Jiemian News, “For transactions over 20,000 yuan, if transferred to our bank account, it needs to be a real-name transfer.”

Experts: Gold at a Crossroads

What caused this recent decline?

On the news front, on March 18, the U.S. Federal Reserve concluded a two-day monetary policy meeting, maintaining the federal funds rate target range at 3.5% to 3.75%.

According to CCTV News, in the early hours of March 23, Iran’s Islamic Revolutionary Guard Corps issued a statement saying that Iran launched the “Real Commitment-4” 75th military operation, attacking Israeli military positions and the U.S. military’s Prince Sultan Air Base in Saudi Arabia.

Everbright Futures Research Director Zhan Dapeng analyzed for Jiemian News that recent gold market movements are closely tied to the evolving US-Iran conflict. Historically, each escalation of the US-Iran conflict has led to rising oil prices, a rebound in the dollar, stock market volatility, and corresponding corrections in gold prices.

“I believe there are two main reasons for this decline: first, the Strait of Hormuz and airspace restrictions have severely limited physical gold liquidity, with Dubai experiencing gold being held up and sold at discounts. Second, rising crude oil prices and renewed inflation expectations globally may lead central banks to end their easing policies early, shifting toward fighting inflation and tightening liquidity, which is bearish for gold,” Zhan Dapeng told Jiemian News.

Regarding future trends, Zhan Dapeng believes gold is at a crossroads. “If prices continue to fall, retracing more than 20% from recent highs, many overseas investors will see 20% as a critical bull-bear dividing line. If it breaks below that, the recent upward trend in gold may pause. Based on the development of the US-Iran conflict, I think gold is now at a window for bargain buying.”

“Heavy prolonged conflict and slow progress could lead to rising oil prices, forcing the Fed into a dilemma of ‘fighting inflation’ versus ‘preventing recession.’ The Fed’s passive defense or rate hikes might trigger economic backlash, which could again boost gold’s safe-haven and inflation-hedging attributes,” Zhan Dapeng added.