As gold prices experience a deep correction, are consumers taking the opportunity to "buy the dip"? How are institutions analyzing the situation?

【Global Times Finance and Economics—Composite Report】Since late March, international gold prices have been staging an “epic-level” surge in volatility, with spot gold remaining in an overall choppy and locked-in trading phase. As of the close on March 27 (Friday), COMEX gold futures were at $4,489.70 per ounce, down 1.86% for the week. Some analysts say that geopolitical tensions have boosted risk-aversion sentiment. Meanwhile, U.S. economic data shows inflation staying at a high level and consumer confidence being insufficient, together driving demand for gold and other safe-haven, inflation-hedging assets.

Recently, Oriental Jincheng published an article analyzing that international oil prices have risen again to their highest levels in four years, lifting market inflation expectations. In addition, at the March monetary policy meeting, the Federal Reserve continued to suspend rate cuts as expected, and its policy statement emphasized uncertainty in Middle East geopolitical risks, causing market expectations for Federal Reserve rate cuts during the year to drop to almost zero. This has supported a stronger U.S. dollar, putting pressure on gold prices.

In addition, Treasury yields have continued to rise sharply driven by inflation breakevens. A large number of funding institutions, to add collateral, have been forced to sell assets such as gold to obtain liquidity. Overall, against the backdrop of sharply cooled expectations for Fed rate cuts as inflation rebound expectations drove them down, and sharply rising Treasury yields triggering tighter liquidity, gold prices have suffered a deep pullback.

However, on the other hand, some media reports say that consumers who had previously been staying on the sidelines because gold prices had remained high have now decisively decided to make purchases amid this drop. Even over the weekend, the foot traffic in the “Shanghai Shui Bei” market remained robust; some popular gold shops were surrounded by customers packed shoulder-to-shoulder, with counters crowded by people picking items and asking about prices.

A shop owner, when interviewed by media reporters, also said that when gold prices were trading at high levels earlier, store customer traffic was relatively muted, but after gold prices fell, customer flow rebounded noticeably. “Those demand-driven clients who hadn’t been willing to pull the trigger earlier have all come. The wedding-themed gold ornaments and large-weight solid bangles are selling really well.”

Looking ahead to the future trend of gold prices, GF Securities believes that geopolitical conflict, to some extent, has extended the time horizon of gold’s bull market cycle. From a longer-term perspective, this kind of longer-cycle consolidation and adjustment will become a window of time for positioning for a long-term strategy.