Gold prices fluctuate sharply. Are safe-haven assets "failing"?

“I previously invested about 20,000 yuan in savings, and a few days ago, my unrealized profit exceeded 3,000 yuan. But this time, with the sharp drop in gold prices, it temporarily turned into an unrealized loss of 1,000 yuan. Today, I checked again, and my account’s profit turned back into an unrealized gain; it turns out the gold price rebounded again,” said Mr. Yan from Tianjin to Securities Daily. He mentioned that the recent volatile gold prices have made his mood swing like a roller coaster, but he hasn’t made any further moves yet and plans to wait and see for a while.

Recently, the sharp fluctuations in gold prices have attracted widespread attention from investors and consumers. Market sentiment has also clearly diverged—some favor “bottom-fishing,” others prefer “liquidating,” and some like Mr. Yan have decided to wait and see. Where will gold prices go next? How should investors respond to the current market? Securities Daily interviewed multiple experts for insights.

Gold Price Growth Narrowed Significantly This Year

Since the beginning of the year, gold prices initially continued their strong trend. The international gold price (using London spot gold as an example) hit a new all-time high on January 29, reaching $5,598.75 per ounce. But afterward, the price paused its upward momentum and fluctuated around the $5,000 per ounce level.

In mid-March, gold experienced a “cliff-like” plunge. Wind data shows that from March 17 to March 23, international gold prices declined for five consecutive days, with daily drops exceeding 3% on March 18, 19, and 20. The price even dipped to a low of $4,098.25 per ounce, nearly erasing all gains made this year. However, starting March 24, gold prices rebounded quickly, rising 1.47% in a single day. As of March 25, the international gold price was still showing a rebound trend, fluctuating around $4,500 per ounce.

Looking at the monthly data, by March 24 close, the international gold price had fallen 15.27% in March. Since the start of the year, the increase has narrowed to 3.56%.

“Gold’s recent correction was large in magnitude and fast in speed, representing the biggest and fastest adjustment since 2019. The driving factors are also different from before,” said Shi Jialiang, Assistant General Manager of the Industrial and Financial Development Division at Zhongtai Futures, in an interview with Securities Daily. He explained that recent international geopolitical risks are significant, and crude oil prices have surged sharply, which on one hand has cooled expectations of Fed rate cuts and even led to expectations of Fed rate hikes in 2026. This has strengthened the dollar and US bonds, directly negatively impacting gold. On the other hand, liquidity crisis fears and global economic crisis expectations have increased, fueling market panic and causing capital to flow out of gold, which short-term is bearish for gold. Under these two core factors, gold has fallen sharply, but this is still a short-term correction, not a medium- or long-term trend.

Liu Siyuan, Chief Analyst at Lingxiu Finance, also told reporters that compared to past corrections, this gold price adjustment, though deep, was very rapid. Structurally, it lacked the long-term suppression seen during the 2008 or 2013 “debt crises” combined with the Fed’s sudden monetary policy shifts. Instead, it more reflects a micro-structural adjustment after the market’s overly bullish stance on gold earlier.

It is worth noting that gold has traditionally been considered a safe-haven asset. The rise in international geopolitical risks, which caused gold prices to fall instead of rise, has sparked discussions about the “failure” of safe-haven assets.

Liu Siyuan believes that gold’s safe-haven properties have not completely “failed.” Instead, they are being suppressed by higher real interest rate expectations and dollar liquidity withdrawal. Currently, gold’s pricing core has shifted from “risk aversion sentiment” to “interest rate expectations and position unwinding.”

Shi Jialiang also stated that gold’s safe-haven attribute has not “failed,” but expectations are already priced in. In this context, the short-term trend of gold has run its course. Of course, the medium- and long-term outlook remains bullish, but in the short to medium term, other factors are taking precedence. The current core logic behind gold pricing still revolves around safe-haven demand, reserve demand, allocation demand, and policy easing, with overall bullish implications.

Banks Issue Multiple Risk Warnings

Amid the sharp fluctuations in gold prices, several banks including ICBC, Bank of China, and China Construction Bank have issued risk warning notices for the precious metals market. For example, ICBC’s announcement urges investors to stay calm and rational, fully assess their risk tolerance, and avoid blindly chasing gains or selling in panic driven by short-term market sentiment. From a long-term asset allocation perspective, it recommends adhering to principles of “total control, phased entry, and diversified layout,” extending investment horizons to smooth out cyclical risks and build more resilient portfolios.

Bank of China emphasized protecting the interests of customers involved in savings gold, interest-bearing gold, and account-based precious metals. It advises customers to be aware of market risks, invest rationally based on their financial situation and risk capacity, control their precious metal holdings reasonably, and use long-term investment strategies to reduce the impact of short-term price fluctuations and prevent potential losses caused by market volatility.

According to reports, the enthusiasm for physical gold jewelry has also increased amid the sharp correction in gold prices. A jewelry store in Tianjin told reporters that in recent days, gold prices have dropped significantly, and combined with store promotions on weight and craftsmanship fees, gold prices are now more attractive, leading to more customers buying gold.

As noted, with international and domestic gold prices declining, jewelry prices have also been sharply reduced. For example, Chow Tai Fook’s gold jewelry prices, according to data from Juhuasuan, fell from 1,629 yuan per gram on March 2 to 1,346 yuan per gram on March 24, a decrease of 283 yuan per gram. Although overall prices have dropped considerably, jewelry prices fluctuate significantly, almost “changing daily.” On March 25, Chow Tai Fook’s gold jewelry was priced at 1,412 yuan per gram, up 66 yuan from the previous day.

How should ordinary investors respond to such volatile gold price movements? Liu Siyuan suggests that in the short term, gold prices are expected to enter a high-volatility bottom-finding phase. Technically, there is a need for an oversold rebound, but a reversal signal requires relief from dollar liquidity pressures or a clear dovish shift in Fed stance. For investors, cautious waiting is currently recommended.

Shi Jialiang believes that in the short term, the Fed’s rate cut expectations have cooled, and factors like dollar index strength, crisis expectations, and capital flows still influence prices. After a sharp decline and rebound, gold and other precious metals are likely to continue adjusting. However, from a medium- and long-term perspective, the four core demands for gold—safe-haven, reserve, allocation, and policy easing—still exist, and the medium- to long-term upward trend in precious metals may remain unchanged.