The violent fluctuations in gold prices are directly reflected in the operating data of the terminal gold market.
Ms. Qi, who has been running a gold jewelry store for a long time, said in an interview with a reporter from Red Star News that since October this year, although the sales volume of gold jewelry in shopping malls has not increased, driven by the rise in gold prices, sales have increased year-on-year. Compared with September this year, sales have also increased. However, the sales of different categories and customer groups showed obvious differentiation. The sales of investment gold bars dropped significantly, and the sales of some gold jewelry also fell.
Ms. Qi further analyzed and pointed out that the impact of rising gold prices on customer groups with different weight requirements is significantly different. Among them, customers of small-gram heavy gold jewelry under 15 grams are more sensitive to gold prices . Affected by the rise in gold prices, the purchasing intention of this customer group has declined, which directly leads to a decline in sales of related products; while customers of large-gram heavy gold jewelry above 20 grams are less sensitive to changes in gold prices , and their purchase demand is relatively stable. Compared with before, sales have not declined significantly.
Faced with market changes brought about by rising gold prices, gold stores are also actively adjusting their business strategies. Ms. Qi revealed that after the rise in gold prices this year, overall sales of gold jewelry have generally declined. In response to this situation, many gold stores have reduced their gold stockpiles to reduce inventory costs and market risks. Some chain gold brands even choose to close stores to survive and shrink their business scale. At the same time, some brands are focusing on high-customer single business, trying to make up for the losses caused by declining sales by increasing the amount of single customer consumption, and seek new profit growth points.
Experts say multiple factors contributed to the plunge in gold prices:
Corrections are normal and there is still room for growth in the future
Regarding the reason for the “diving” of international gold prices on October 9, Song Xiangqing believes that this is the result of the joint action and resonance of multiple factors, with the main driving forces coming from three aspects.
First, U.S. economic data outperformed expectations, cooling market expectations for an interest rate cut by the Federal Reserve. Song Xiangqing said that the U.S. non-farm employment data for September released on October 4 far exceeded expectations (an increase of 254,000 people, the unemployment rate fell to 4.1%), and wage growth rebounded to 4.0%. This data broke the market’s previous expectations for a radical interest rate cut at the Federal Reserve’s October 29 meeting. The CME FedWatch tool showed that the probability of a 25 basis point interest rate cut fell from 97% to 75%. The U.S. dollar index surged 60 points that day, breaking through the 102 mark, and the real interest rate rose back to 1.796%, directly suppressing the attractiveness of gold.
Secondly, technical callback pressure is concentrated. Song Xiangqing introduced that between September 25 and October 8, the price of London gold increased by a cumulative rate of 8.3%, and once exceeded the US$4,000/ounce mark. In the process, the relative strength index (RSI) continues to be in the overbought zone, and there is a strong demand for mean reversion in the market. On October 9, the price of gold in New York hit a low of $4,019.2, a correction of 2.6% from the previous high. This trend is in line with the typical characteristics of “technical correction after new highs”.
Finally, profit-taking selling and reversal of market sentiment are also reasons for gold price fluctuations . Song Xiangqing explained that the holdings of SPDR, the world’s largest gold ETF, increased to 1,014.58 tons on October 8, setting a record high, but futures market data showed a different trend. In the week ending October 1, Comex’s non-commercial net long gold position decreased by 12,000 lots to 287,000 lots. This data shows that some speculative funds have made arrangements in advance and begun to take profits. In addition, geopolitical risks such as the situation in the Middle East have eased, and market risk aversion has cooled, which has also amplified the decline in gold prices to a certain extent.
