Gold Jewelry Prices of Domestic Brands Drop Significantly Below 1,400 Yuan

Domestic jewelry gold prices fall below 1,400 yuan per gram.

On the early morning of March 21, the international gold market experienced a sharp decline, with spot gold and gold futures both falling below the $4,500 mark, dropping over 10% for the week—the largest weekly decline in 43 years. This plunge left many investors puzzled, especially since ongoing Middle East conflicts should have heightened gold’s status as a safe-haven asset. Instead, gold prices have moved in the opposite direction, with domestic gold jewelry prices also dropping sharply.

On March 21, Chow Sang Sang’s pure gold jewelry was quoted at 1,389 yuan per gram, down 54 yuan from the previous day. In just a few days, from March 16’s 1,540 yuan per gram, the price has fallen by 151 yuan. Chow Tai Fook’s gold jewelry price also dropped from 1,447 yuan per gram to 1,397 yuan per gram, a daily decrease of 50 yuan.

Generally speaking, with Iran and Israel exchanging strikes, Iran attacking energy facilities in the Persian Gulf, and the U.S. deploying three warships and thousands of Marines to the region, tensions in the Middle East remain high. Gold’s traditional safe-haven role should have been highlighted, but in reality, gold prices have continued to decline. Analysts suggest that the core reason is that the market’s main trading focus has shifted away from geopolitical risk hedging to concerns over inflation expectations and monetary policy battles.

On the news front, Federal Reserve Chair Jerome Powell clearly stated at the March policy meeting that the rise in energy prices caused by the war has directly pushed up inflation and could impact consumption and squeeze corporate profits. Until inflation shows clear signs of improvement, the Fed will not consider cutting interest rates.

This statement has kept the market’s expectations for the dollar high, and rising oil prices have further intensified this trend. The logic is that since global energy settlements are mainly dollar-denominated, higher oil prices increase demand for the dollar, causing the dollar index to strengthen. Typically, gold and the dollar are negatively correlated; a stronger dollar tends to put downward pressure on gold prices.

Additionally, some analysts point out that the funding structure in the gold market has changed, amplifying this decline. Previously, most gold buyers were central banks and long-term investors, whose trading was steady and unlikely to cause large swings. Now, the key “buyers” behind this gold market are ETFs and quantitative funds, whose increasing participation leads to faster inflows and outflows, directly increasing gold price volatility. In the short term, gold now behaves more like a highly volatile trading asset rather than the stable safe haven many perceive it to be.

However, industry insiders believe there’s no need to overreact to the short-term plunge in gold. Data shows that despite this sharp drop, spot gold has still gained 4.02% this year. Yao Yuan, senior investment strategist at Orient Futures Asset Management’s Asia Research Institute, told media that the recent decline is merely a short-term liquidity squeeze, and the long-term investment logic for gold remains unchanged.

Yao Yuan explained that, in the short term, geopolitical conflicts and energy price shocks have led investors to cash out their portfolios, causing gold to fall. But over the longer term, gold’s performance as a hedge against geopolitical and macroeconomic risks is well recognized. For investors, the key is to distinguish between short-term fluctuations and long-term prospects, and not to dismiss gold’s value as a long-term asset because of this recent decline.

Currently, the situation in the Middle East remains uncertain, and the Federal Reserve’s monetary policy still has variables. Short-term volatility in the gold market may continue. However, the market generally believes that as long as global macro risks and geopolitical uncertainties persist, gold’s long-term safe-haven value will not disappear. The increased short-term trading activity, however, will make future market fluctuations more unpredictable.

Source: Securities Times Official WeChat

Massive information, precise analysis, all on Sina Finance APP

Editor: Yu Yihan