Gold Price Drops Below $4,500! Someone "Bought the Dip" with 160 Grams of Gold and Was Shocked: Already Lost Over $10,000

(Source: Shanghai Observer News)

International gold prices have fallen for several consecutive days.

On Friday, the prices of precious metals worldwide generally declined, with gold dropping below the $4,500 mark. Spot gold fell by 3.42%, to $4,491.67 per ounce; COMEX gold futures declined by 2.47%, to $4,492.00 per ounce.

As a safe-haven asset, gold has shown “unusually” weak performance since the recent Middle East geopolitical conflicts, leaving many netizens confused: they can’t understand it.

Hangzhou man keeps “buying the dip”

After purchasing 160 grams of gold, he was stunned: already lost over 10,000 yuan

“I didn’t buy, and everyone around me said buying gold was profitable. Why did the price drop as soon as I got in? Did I really crash the market with my buying?” On the evening of March 18, Mr. Zheng, a post-90s investor from Hangzhou, was browsing the Middle East situation and watching gold prices, unable to stop himself from repeatedly asking in an investment group.

“Every time I buy, it drops, and the gold price keeps falling. If this continues, when will I break even?” Mr. Zheng began to doubt the concept of gold as the “king of safe havens.”

According to media reports, at the end of February, after Israel and the U.S. launched military strikes on Iran, Mr. Zheng was tempted to buy gold. “They say gold is a safe haven, and with the tense situation, I thought it would rise.” Mr. Zheng works at a tech company in Binjiang, Hangzhou. Although he has never bought gold before, he has always wanted to find an opportunity to buy.

Photo provided by interviewee

On March 2, he purchased 100 grams of gold bars from a friend’s jewelry company at 1,188 yuan per gram. “At the time, I thought this number was quite lucky, and I would make a profit.” Mr. Zheng said with a bitter smile.

After buying, the gold price indeed rose for a while, even breaking through 1,200 yuan per gram the next day. But the good times didn’t last. Starting March 4, the gold price turned downward, entering a weak consolidation phase, and never returned to his purchase level.

On March 18, when he saw gold prices drop below $5,000 per ounce again, Mr. Zheng couldn’t resist buying the dip. He bought three small 20-gram gold bars at 1,120 yuan per gram, bringing his total gold holdings to 160 grams.

But what disappointed him was that the gold price fell again after his purchase. Starting around 8 p.m. on the 18th, London spot gold prices plummeted. “I didn’t sleep well all night. When I checked in the morning, the purchase price of the gold bars was about 1,080 yuan per gram. Roughly calculating, the 160 grams of gold I bought has already lost over 13,000 yuan.” Mr. Zheng sighed, “I can only hold on.”

Rate hike logic suppresses safe-haven logic

According to media reports, Qu Rui, Senior Vice President of the Research and Development Department at Dongfang Jincheng, stated, “The ‘counterintuitive’ movement of gold prices mainly stems from the significant suppression of safe-haven logic by interest rate considerations.”

A key background is that during a “super central bank week” when many central banks announced interest rate decisions, the escalation of Middle East tensions pushed oil prices higher. From the Federal Reserve to the Bank of England, policy tone seems to be shifting towards a “hawkish” stance, and global financial markets’ expectations for monetary policy have quickly turned “hawkish.”

Federal Reserve Chair Jerome Powell said after the March policy meeting that rising energy prices have directly pushed up inflation and may have chain effects on the economy by suppressing consumption, squeezing corporate profits, and disrupting supply chains. Until inflation shows clear signs of improvement, rate cuts are not on the table. Although rate hikes are not the mainstream expectation, they remain within policy discussions.

Additionally, the Bank of England also signaled a “hawkish” stance: “If larger or more persistent shocks occur, tighter policy measures will be necessary.”

Qu Rui explained that market expectations for rate cuts have cooled significantly, driving U.S. Treasury yields and the dollar index higher. Recently, liquidity has tightened due to U.S. private credit withdrawals, making the dollar attractive both as a safe haven and for returns, thus diverting safe-haven funds. Meanwhile, as a non-yielding asset, holding gold becomes more costly as U.S. Treasury yields rise.

Liu Shiyao, a precious metals researcher at Zijin Tianfeng Futures, told reporters: “On one hand, the surge in oil prices reignites inflation expectations, and the Fed’s rate cut expectations for the year have greatly diminished, providing solid support for the dollar through interest rate differentials. On the other hand, rising oil prices mean the world needs more dollars for energy settlements, leading to passive expansion of dollar demand under the ‘petrodollar’ system. Usually, the dollar index and gold are negatively correlated. When the dollar surges, gold is under pressure under traditional safe-haven logic, showing that dollar appreciation has surpassed geopolitical premiums in suppressing gold prices.”

Yao Yuan, senior investment strategist at Orient Securities Asset Management’s Asia Research Institute, believes that short-term liquidity squeezes in gold exist, but the long-term allocation logic remains unchanged. Investors must distinguish between short-term volatility and medium- to long-term prospects for gold.

Yao Yuan said that in the short term, geopolitical conflicts and the resulting energy price shocks are the main drivers of global “safe-haven trading.” In such environments, investors tend to cash out of their portfolios. However, over a longer cycle, gold’s historical performance in resisting geopolitical, macroeconomic, and policy risks is well documented, and gold remains a viable allocation.

Compiled from China News, Shanghai Securities News, The Beijing News, and Daily Economic News

Original Title: “Gold Price Breaks Below $4,500! Someone ‘Buying the Dip’ with 160 Grams of Gold and Gets Shocked: Already Lost Over 10,000 Yuan”

Header Image Source: Shanghai Observer

Source: Authors: Xinmin Evening News, Wei Jiawei, Zhou Chunsheng, Integrated