Gold prices experience huge fluctuations! Once again, a buying frenzy for gold has emerged here.

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“It’s another day to make history!” a precious metals futures trader told Shanghai Securities Journal on the afternoon of March 23. Today was very busy, with clients continuously asking whether gold prices can stop falling.

On March 23, gold prices experienced a huge shakeup. First, there was a sharp plunge in the afternoon, breaking through multiple support levels. The spot gold price hit a low of $4,099.55 per ounce during the day, dropping over 8% at one point. The precious metals sector also led the decline in A-shares: according to Tonghuashun data, the sector fell 8.3% by close; among individual stocks, Chifeng Gold and Sichuan Gold hit the daily limit down, Shan Jin International and Hunan Silver fell more than 9%. Brands like Chow Tai Fook, Chow Sang Sang, and Lao Miao Gold also lowered their pure gold jewelry prices, generally falling back to around 1,370 yuan per gram.

In the evening of March 23, spot gold rebounded slightly, rising 0.15% as of the latest report.

At noon on March 23, Shanghai Securities Journal visited Shenzhen Shuibei Gold Plaza and Shuibei Jewelry Exhibition to find that, despite the price decline, there was a renewed rush to buy gold in Shuibei. Even though it was the first working day of the week, many consumers came to purchase gold. In the afternoon, foot traffic increased significantly, with many out-of-town tourists carrying suitcases specifically coming to Shuibei to buy gold.

Shuibei Gold Plaza, noon on March 23. Photo by Yang Ziyan

Geopolitical risks may continue to dominate market trends

Currently, the conflict in the Middle East continues to spill over, yet gold, known as a “safe-haven asset,” is still falling sharply. Experts interviewed believe that while gold’s safe-haven properties remain, the core factor driving gold prices has shifted to expectations of global real interest rates. Additionally, gold has risen to high levels, and some investors are taking profits. Moreover, tools like ETFs and futures have played a key role in capital fleeing during this period.

熊园, Chief Economist at Guosheng Securities, told Shanghai Securities Journal that recent overall declines in gold prices are larger than declines in major assets. The main reason is that since the escalation of Middle East tensions, rising oil prices have increased inflation expectations, which in turn has led markets to expect a delay or even an increase in Federal Reserve rate cuts, causing liquidity in the dollar to tighten.

“Looking back over the past year or two, a major trigger for gold price increases was the weakening of dollar credit and the resulting dollar depreciation,” 熊园 said. Currently, the Middle East situation has temporarily ended the logic that ‘a weaker dollar is bullish for gold.’ The current decline in gold prices is not because safe-haven sentiment has disappeared, but because the market’s expectation of a stronger dollar amid war has become the dominant factor.

“With the escalation of Middle East tensions, major central banks have signaled hawkish policies during the ‘Super Central Bank Week,’ tightening monetary policy globally. This has pushed long-term government bond yields higher, putting pressure on gold and silver prices,” said a March 22 report from Dongwu Securities. As a globally priced asset, gold is not only influenced by U.S. real interest rate expectations but also by global real interest rate expectations.

Senior analyst Shi Zheqi from Fubao Information on nickel and precious metals told Shanghai Securities Journal that, historically, gold prices tend to rise during the “expectation phase” before conflicts erupt, and then fall after the conflict actually begins due to “profit-taking.” The market experienced two major bear markets in the 1980s and from 2011 to 2015, with declines exceeding 40%. Today’s decline is similar to sharp drops in 2008, 2020, and 2022, indicating a strong desire for capital to flee.

Liu Shiyao, researcher at Zijin Tianfeng Futures for precious metals, said that gold, being part of the global liquidity chain, is subject to passive redemptions to meet margin calls triggered by stock market declines.

Shi Zheqi also analyzed that today’s sharp drop in gold was not because the safe-haven logic has permanently failed, but because the global financial markets experienced liquidity shocks, triggering chain reactions. Specifically, Middle East tensions pushed oil prices higher, raising inflation fears, reigniting expectations of Fed rate hikes, and increasing the cost of holding non-yielding assets like gold, leading to selling. Meanwhile, hawkish signals from the Fed caused Treasury yields to soar and the dollar to strengthen, causing stock and bond markets to fluctuate and decline, forcing leveraged funds to meet margin calls. To cover margins elsewhere, funds were forced to sell profitable, liquid assets to raise cash.

“Gold, one of the most profitable assets in the previous bull market, has unfortunately become a ‘cash machine.’ Today’s sharp decline is a forced liquidation by funds to cover other market blow-ups, fundamentally different from active selling targeting gold,” Shi said. “Capital outflows are not completed instantly after news releases but propagate and ferment. ETFs, futures, and other tools have acted as key ‘amplifiers’ and ‘accelerators’ in this process.”

Liu Shiyao noted that from a fundamental perspective, the core logic of gold has not fundamentally changed. The recent decline is more like a “misfire” caused by liquidity shocks.

熊园 also said that in the short term, gold is mainly affected by liquidity shocks from the rising dollar. However, since the factors supporting gold prices—safe-haven demand and weakening dollar credit—still exist, and the U.S. still needs to maintain loose fiscal and monetary policies, the long-term value of gold remains optimistic.

“Today’s plunge in gold prices is more like a deep correction in a bull market rather than the end of the bull run,” Shi said. The breakout of the gold-silver ratio confirms that market safe-haven sentiment remains high, and capital is flowing out of precious metals. If the ratio continues to widen to 68 or higher, it may indicate further downward pressure on precious metals overall.

Industry insiders also warn that geopolitical risks may continue to dominate market trends, with short-term high volatility in gold prices. Investors should be cautious of price corrections.

Gold buyers’ sentiments vary

The falling gold prices have reignited consumer enthusiasm for buying gold. Yao Chuwei, manager of Longfeng Xifu Jewelry, told reporters that after domestic gold prices fell below 1,000 yuan per gram, foot traffic in the store increased by 20-30%. “When gold was above 1,100 yuan per gram, sales and customer flow were relatively dull. After the price dropped below 1,000, the store saw a noticeable increase.”

During visits, it was observed that consumer attitudes varied amid the price decline.

“I mainly see it as a bottom-fishing opportunity, optimistic about future trends,” said Chen Mengxia, who came from Shanghai to buy gold jewelry. She recently purchased 6 grams of jewelry gold and plans to buy more.

Ms. Cao, who advocates long-term holding of gold assets, said, “I’ve always bought gold jewelry at different price points. Now that prices have fallen, I plan to buy some more for both wearing and value preservation.”

Li Yongchang, manager of Shengshihe Jewelry, said some consumers who bought at high prices are taking advantage of the current dip to buy investment gold bars to lower their average cost. “Some others have been watching and didn’t buy when prices were high, but now they’re jumping in.”

Li pointed to a gold gourd pendant weighing 8 grams and said, “I wanted to buy this pendant two years ago. Later, gold prices rose, and the jewelry became more expensive. I kept watching. Now that prices have fallen, I decided to buy it quickly.”

Consumers are selecting gold jewelry. Photo by Yang Ziyan

Business pressures increase

What impact does the gold price decline have on businesses?

For Li Yongchang, who mainly deals in investment gold and silver bars, the recent volatility has had little effect. “I see that other jewelry stores have seen a surge in foot traffic. I’m fine; no new customers, mostly regulars acting. I hope gold prices stay stable.”

For Yao Chuwei, who mainly sells gold jewelry, the falling prices bring both increased customer flow and greater operational pressure. “A sharp drop in gold prices hurts businesses,” he said. The volatility increases risks for downstream jewelry retailers. On one hand, inventory costs are higher than current prices, squeezing profits; on the other hand, upstream suppliers are reluctant to sell, making it harder to ensure stable supply.

On-site at Shuibei Gold Plaza, Yang Ziyan took photos.

In response to large swings in gold prices, businesses have adopted different strategies.

Yao Chuwei uses a “sell and replenish” approach, quickly adding gold equal to what he sells to ensure supply. “I used to wait a few days to see gold prices before restocking, but recently I replenish immediately after a sale.”

Li Yongchang employs a staggered accumulation strategy during dips. “I am long-term bullish on gold. As long as cash flow is sufficient, I buy more when prices fall.”

Experts: Gold prices are unlikely to rise in the short term

Song Jiangzhen, director of the Southern Gold Market Research Center in Guangdong, believes that the current downward trend in gold is characterized by a concentrated release of “bottom-fishing” sentiment, with both investment and demand heating up. Investment gold sales are increasing, with standard investment bars being the most popular—some channels report over 50% year-on-year growth. Wedding-related demand is also accelerating, with 2026 expected to be a wedding boom year, prompting couples and families to stock up early during the price dip, boosting sales of wedding gold jewelry. Online channels are growing faster than offline.

Song said that consumer awareness continues to improve. “After two years of rising gold prices, domestic consumers’ recognition of gold’s value as a hedge and inflation-resistant asset has deepened. The mindset has shifted from ‘buy when prices rise’ to ‘hedge when rising, buy the dip when falling,’ becoming a mature investment and consumption approach.”

Photo of Shuibei Gold Plaza, Yang Ziyan

Zijin Tianfeng Futures senior precious metals analyst Liu Shiyao told Shanghai Securities Journal that the main driver behind this round of sharp gold price correction is the ongoing escalation of Middle East conflicts, which keeps oil prices high.

On one hand, rising oil prices boost inflation expectations and push up U.S. Treasury yields, significantly suppressing the Fed’s rate cut expectations and even re-pricing some rate hike probabilities, supporting a stronger dollar. On the other hand, the oil-dollar mechanism means higher oil prices increase the demand for dollars globally, passively strengthening the dollar. Both channels point to a strong negative correlation between the dollar and gold prices.

Regarding future gold price trends, Liu said, “If oil prices stay high, gold prices will struggle to rise. The two are unlikely to resonate in the short term, but long-term outlook remains bullish.”

Song Jiangzhen advised that the core principles for consumers buying gold are to distinguish needs, make rational allocations, strictly control risks, and buy through正规渠道. “If there is a clear immediate need, the current dip is a good entry point. You can buy in batches based on your own needs without over-concern about short-term lows. For investment purposes, avoid chasing highs or blindly speculating on a single trend. It’s better to use dollar-cost averaging, buying gradually during dips to smooth out price fluctuations.”