Financial Services Association, May 13 (Reporter Wang Hong) The gold market, which has been soaring all the way up, is once again fluctuating at a high level. Today's spot gold fell below 2,340 US dollars/ounce, with an intraday decline of 0.88%. In fact, after entering May, international gold prices once fell by as much as 6%. Industry experts pointed out that the fall in gold prices is due to the fact that international gold prices are already at historically high levels, and profit markets rebounded after the geographical conflict cooled down. The fluctuation in gold prices after a high level reflects the market's disagreement over the future trend of gold.

According to data from the World Gold Council, total global demand for gold (excluding OTC) declined in the first quarter of this year, and global jewellery consumer demand also declined year-on-year. Meanwhile, the total amount of money collected in the first quarter also hit a three-year high. Experts remind that the driving logic of this round of national gold price increases is different from 2011. Consumers should pay attention to blindly following risks, market risks, and channel risks. Investors are advised to do what they can, not blindly enter the market, and invest in diversification and steady.

The recent fluctuation in gold prices reflects differences in market expectations

In recent months, the price trend in the global gold market has been rising. According to UBS, the price of gold soared 20% between mid-February and mid-April. “Since the beginning of March, international gold prices have continuously set new historical records and record highs due to a combination of factors such as expectations of interest rate cuts by the Federal Reserve and the risk of uncertainty brought about by the continued heating up of international geopolitical conflicts,” Li Guangguo, director of the Beijing Gold Economic Development Research Center, said while analyzing the reasons behind the rise in gold prices.

Louise Stree, a senior market analyst at the World Gold Council, also pointed out that there are various factors behind the recent surge in gold prices. First, increased geopolitical risks, compounded by continued macroeconomic uncertainty, have joined forces to boost investors' safe-haven demand for gold. Furthermore, continued gold purchases by central banks around the world, strong OTC investment, and an increase in net purchases in the financial derivatives market all contributed to the rise in gold prices.

However, the gold market has recently put a foot on the “brakes.” Since the spot price of gold in London hit a record high of 2431.78 US dollars/ounce on April 12, it began a volatile adjustment. On May 3, it once hit a new low since April 5, and the biggest cumulative decline during the period reached 6.36%. Today's spot gold fell below 2,340 US dollars/ounce, with an intraday decline of 0.88%.

Meanwhile, during the “May 1st” holiday period, due to the fall in international gold prices, the domestic gold market also ushered in a wave of price cuts. Many gold brands have followed up with price reduction promotions, and the price even dropped below 600 yuan/gram after the discount.

Regarding the recent increase in the gold market's fluctuation at historically high levels, Zhou Maohua, a macro researcher at Everbright Bank's Financial Markets Department, believes that this shows that the market is clearly divided on the future trend of gold, and is beginning to be wary of this short-term unilateral and sharp rise in the market. “The main reason for the fall in gold prices is that international gold prices are at historically high levels. As the geographical conflict shows signs of cooling down, real interest rates have risen, leading to a return in profit markets.”

Zhou Maohua said that judging from the trend, there is uncertainty about the gold trend. On the one hand, the geographical conflict continues, and developed economies are gradually transitioning to a cycle of interest rate cuts, and there is a trend of diversifying the official asset structure of some central banks; but on the other hand, gold prices are at historically high levels, and future real interest rates may still pose resistance, and the market already has sufficient pricing on the geographical conflict.

Experts recommend investors diversify and invest steadily

Although the price of gold has been rising recently, for investors and consumers, some signals behind macro data cannot be ignored. According to the latest report released by the World Gold Council, in the first quarter of 2024, total global demand for gold (excluding OTC transactions) was 1102 tons, down 5% year on year; gold investment demand (excluding OTC) was 199 tons, down 28% year on year; global jewellery consumer demand fell slightly by 2% year on year to 479 tons.

Li Guangguo said that every market has ups and downs, and any investment is risky. Currently, blindly following risk, market risk, and channel risk are some aspects that must be paid attention to. Some consumers and investors subjectively lack understanding of the gold market. They are buying up or down, blindly following the trend and rushing to get on the bus. The most intuitive example is that during the gold investment boom in 2011, some people were superseded for 9 years and only lifted in 2020.

Notably, some investors have taken advantage of higher gold prices to understand profits. According to the World Gold Council report, the total amount of recycled gold in the first quarter hit a quarterly high since the third quarter of 2020, with a year-on-year increase of 12% to 351 tons.

“Objectively, the driving logic behind this round of international gold prices is quite different from 2011. The rise and fall of the market is difficult to grasp, and the huge fluctuations in the market make it even more difficult for ordinary consumers and investors to grasp and bear.” Li Guangguo reminded consumers to also pay attention to the current market risks in the gold market, and suggested investing in gold jewellery and investing in gold bars. They should not enter the market blindly and follow the trend.

Wang Pengbo, a senior financial analyst at Broadcom Consulting, believes that investors should still pay attention to the risk issues behind gold financial management. Although gold has strong potential to add value in the long run, short-term price fluctuations may be normal, and investors should anticipate and prepare for this. You need to be rational and cautious when getting involved in gold investment, and formulate reasonable investment strategies based on individual risk appetite. When choosing gold investment products, product liquidity and investment thresholds are factors that cannot be ignored.

Zhou Maohua, on the other hand, suggested that there are still many uncertain factors affecting the gold price trend in the future, and the professional requirements for investors are higher. From the perspective of steady investment, investors are advised to prefer diversified investment portfolios and steady investments.