# Year-to-Date Gains Quickly Approaching Zero! Gold Plummets, Shui Bei Merchants: Many Inquiries, Few Buyers

Gold prices “crashed.”

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: Chow Tai Fook paid 1375 yuan/gram, Zhou Dafu paid 1370 yuan/gram, Luk Fook Jewelry quoted 1373 yuan/gram, with daily declines approaching 5%.

Major gold brands have all lowered prices, with daily drops close to 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. Members 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.

With gold prices plunging sharply, how is the gold sales market performing? Will the strong upward trend of gold come to an end?

Water Bay: Some buy, some watch, some regret buying early

“Gold prices are falling, come stock up on gold bars!” Recently, several gold merchants in Shenzhen’s Water Bay have been actively attracting customers on social media.

Around noon on March 23, Water Bay gold prices were 1012 yuan/gram, down from 1046 yuan/gram on the 22nd.

A Water Bay merchant told Jiemian 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 at just over 1000 yuan, it actually meets many people’s mental thresholds.”

Due to the continuous sharp decline in gold prices over several days, some market participants are buying on dips, some are waiting and watching, and others regret buying too early.

A gold buyer told Jiemian News, “I’ve been purchasing wedding jewelry recently. 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 Water Bay. Today, gold prices fell again, which is a bit frustrating, but since it’s for a wedding, 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 Jiemian News, “Many people ask for prices, but few buy. With the current market, not buying is normal. After so many days of decline, people are just waiting a few more days.”

Additionally, traders generally are reluctant to sell at low prices, and suppliers need to add a premium to purchase. “It’s hard to get supplies; you can’t buy at original prices, you have to pay extra. Suppliers don’t want to sell cheaply,” a Water Bay merchant said.

Notably, on March 18, the Shenzhen Gold and Jewelry Industry Association issued a “Proposal on Regulating Business Practices in Shenzhen’s Gold Industry” (the “Proposal”), which states that large transactions over 20,000 yuan must be registered with real names, ensuring that bank account names match ID cards.

A merchant told Jiemian 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 recent decline?

On the news front, on March 18, U.S. Federal Reserve concluded a two-day monetary policy meeting, announcing that the federal funds rate target range would remain 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 base at Prince Sultan Air Base in Saudi Arabia.

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

“I believe there are two main reasons for this decline: first, the severe restrictions on the Strait of Hormuz and airspace operations in various countries, affecting physical gold liquidity, with recent reports of Dubai gold being held up and sold at discounts. Second, rising oil prices and renewed inflation expectations globally may lead central banks to tighten monetary policy sooner than expected, shifting from easing to fighting inflation, which is inherently bearish for gold,” Zhan Dapeng told Jiemian News.

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

“He said, 'If the US-Iran conflict becomes prolonged and progresses poorly, rising oil prices will become more prominent, forcing the Fed into a dilemma of ‘fighting inflation’ versus ‘preventing recession.’ The Fed’s passive defense or rate hikes could backfire on the economy and will likely reignite gold’s dual role as a safe haven and inflation hedge,” Zhan Dapeng added.