Gold Price Collapsed! Shuibei Merchants: Many Inquiries, Few Buyers

Image source: JiJian Gallery

JiJian News Reporter | He Liuying

JiJian News Editor | Wang Shu

Gold prices have “collapsed.”

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, with Chow Tai Fook reporting 1375 yuan/gram, Zhou Shou Fu 1370 yuan/gram, Luk Fook Jewelry 1373 yuan/gram, with daily drops close to 5%.

Major gold brands have all lowered prices, with daily declines approaching 5%. Source: Tencent Financial Connect

On March 23, the Shanghai Gold Exchange issued a notice on strengthening recent market risk control, stating that recent factors have caused increased market instability and significant volatility in precious metal prices. All member units 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 fallen, 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 Shui Bei merchant told JiJian 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 continuous sharp declines in gold prices over several days, some market participants are buying low, some are waiting, and others regret having bought early.

A gold buyer told JiJian News, “Recently, I’ve been purchasing wedding hardware. I bought three gold pieces when prices were low last round. This weekend, seeing gold prices drop, I quickly bought 30 grams of gold at Shui Bei. Today, gold prices fell again, which is a bit frustrating, but since it’s for wedding needs, I feel 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 JiJian News, “Many people ask for prices, but few buy. With the current market, not buying is normal. Prices have fallen so much over several days, everyone is willing to wait a few more days.”

Additionally, traders generally are reluctant to sell at low prices, and merchants need to add markup when sourcing. “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 titled “Proposal on Regulating Business Practices in Shenzhen’s Gold Industry” (the “Proposal”). It states that large transactions over 20,000 yuan should be registered with real names, and the bank account name must match the ID card holder.

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

Experts: Gold is at a crossroads

What caused this round of decline?

On the news front, on March 18, 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 sites and the U.S. military’s Prince Sultan Air Base in Saudi Arabia.

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

“The main reasons for this decline are twofold: first, the severe restrictions on the Strait of Hormuz and airspace operations in various countries have affected physical gold liquidity, with Dubai experiencing gold being held back and sold at discounts. Second, rising oil prices and renewed inflation expectations globally may lead central banks to end their easing policies earlier, shifting toward anti-inflation measures, which tightens liquidity and is inherently bearish for gold,” Zhan Dapeng told JiJian News.

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

“He also added, ‘If the US-Iran conflict becomes prolonged and progresses poorly, rising oil prices will become more prominent, forcing the Federal Reserve into a dilemma of fighting inflation versus preventing recession. The Fed’s passive defense or rate hikes could backfire on the economy, which would again boost gold’s safe-haven and anti-inflation attributes.’”