Gold prices are experiencing increased volatility. How will the market develop moving forward?

After a significant pullback, the gold market continues to be in a consolidation phase.

On March 24, following a rare sharp drop in the previous trading day, spot gold continued its adjustment trend during the day, approaching the key level of $4,300/ounce at one point, before gradually narrowing its losses and briefly turning positive, with the tug-of-war between bulls and bears significantly intensifying.

As of the time of reporting, London gold is quoted at $4,403.82/ounce, down 0.08% for the day, with an intraday low of $4,305.32/ounce and a high of $4,417.11/ounce, showing a notable increase in overall volatility.

The futures market also exhibited a pattern of initial suppression followed by a rebound. As of the time of reporting, COMEX gold futures are up 0.19% for the day, quoted at $4,415.5/ounce, with an intraday low of $4,306.3/ounce and a peak touching $4,450.5/ounce, maintaining a correlation with the spot market trend.

Affected by the significant adjustment in international gold prices, several domestic brands of pure gold jewelry have seen their prices fall back to the levels at the beginning of the year. Among them, Chow Tai Fook’s gold jewelry is quoted at 1,346 yuan/gram, down 11 yuan from 1,357 yuan/gram on January 1; Chow Sang Sang’s gold jewelry is quoted at 1,350 yuan/gram, down 10 yuan from 1,360 yuan/gram on January 2.

“The recent adjustment in gold prices is a result of the resonance of macroeconomic conditions, trading sentiment, and structural factors,” analyzed Zhang Pengyuan, a wealth researcher at Paipai Network. At the macro level, the Federal Reserve’s hawkish stance has strengthened the dollar and real yields on U.S. Treasuries, significantly increasing the opportunity cost of holding gold, which has triggered capital outflows; at the trading level, gold prices have accumulated substantial profit margins at historical highs. After breaking through key support levels, technical selling and profit-taking have triggered a cascade effect, amplifying short-term declines.

Looking ahead, Zhang Pengyuan believes that gold prices will remain under pressure in the short term, with increased volatility likely under a high-interest-rate environment; the mid-term trend will depend on the interplay of U.S. inflation data and geopolitical situations; in the long term, the core supporting logic of global de-dollarization trends, central bank gold purchases, and geopolitical uncertainties has not changed, and the current adjustment can be seen as a normal fluctuation in the long-term allocation process.

Hou Yanjun, general manager of Hushi Tiancheng Investment, suggests that short-term investors should closely monitor the progress of U.S.-Iran negotiations. If the situation eases and liquidity issues are alleviated, precious metals may rebound; if negotiations stagnate and conflicts worsen, soaring oil prices may once again disturb gold and silver prices. He pointed out that the long-term logic for precious metals to rise has not completely changed, and advises investors to adopt a wait-and-see approach, maintaining a long-term mindset to wait for the right opportunity to enter.

Guotai Junan Securities’ research report indicates that the recent continuous decline in gold prices is partly due to the prior excessive increase in gold prices, facing liquidity shocks from capital withdrawals when risk appetite decreases; on the other hand, the market expects that tightening monetary policy will lead to rising real interest rates, which also exerts pressure on gold. Looking ahead, gold may still be under phase-specific pressure due to the situation in Iran in the short term, but if long-term inflation expectations rise, it will return to a favorable environment; the medium to long-term logic for an upward trend remains solid, and attention can be paid to allocation opportunities during fluctuations and declines.

Huashan Fund believes that gold’s safe-haven property has never failed. The medium to long-term trend of gold prices ultimately depends on two main lines: the weakening of the dollar’s credit and the trend of global liquidity easing. For investors, anchoring core logic and filtering out short-term noise is essential to grasp the long-term value of gold in asset allocation.

Reporter: Lu Yiwen

Text Editor: Chen Si