Source of this article: Times Weekly Author: Special Reporter Meng Fanrui
In the first half of 2022, gold prices rose, rising to a peak of US$2070.21 per ounce in March. Later, because the Federal Reserve , the Federal Reserve and others tightened monetary policies quickly in response to inflation, the price of gold began to fall. As of September 23, spot gold fell below $1,650/ounce, and the latest fixed price was $1,643.6/ounce, the first time since April 2020, with an intraday drop of more than 1.5%.
Industry insiders pointed out that due to the impact of the Fed's interest rate hike on , the US dollar price continues to rise. In addition, the Fed's measures to maintain rate hike for some time in the future are clear. The US dollar trend is negatively correlated with the gold price trend , and the short-term gold price may further decline. World Gold Association said that if the interest rate hike continues to be strong, gold prices may continue to be under pressure, but the risk of global economic stagflation may offset this pressure, because gold has historically performed well in this environment.
World Gold Council statistics show that in the first eight months of this year, gold price in US dollars has fallen by 5%, while gold denominated in other currencies performs well overall, which is good news for non-US dollar investors. Gold remains one of the best performing assets this year.
"Golden September and Silver October" is the traditional peak wedding season, and Shenzhen Shuibei often welcomes a large number of "gold rushers". In the gold jewelry circle, "Look at Shenzhen in China, and see water shells in Shenzhen jewelry" is widely circulated. This sentence vividly interprets Shuibei's industry leadership position in the gold and jewelry market.
Times Weekly reporter recently visited the site and found that although Jinge has fallen sharply compared with the beginning of the year, the market is still relatively deserted. Many businesses place their hopes on the National Day holiday and hope that the market will rebound.
The gold market is deserted. The store owner lowered his head to play with the mobile phone
"Shenzhen Shuibei set off a wave of gold buying" topic, which was previously on the hot search on Weibo. After the prosperity, the market returns to rationality. On September 23, a reporter from Times Weekly visited Shenzhen Shuibei and did not find any scenes of "aunts grabbing gold in a crazy way."
"We mainly focus on wholesale, but the market conditions are not good recently, and there will be retail orders." A shop owner told the Times Weekly reporter that the current basic gold price is 387 yuan/gram, plus the processing fee, basically the price of jewelry, and the market price is relatively transparent. The shop owner also said that a few months ago, the price of gold was 418 yuan/gram, and now the price has dropped by 7.4% from the previous year, at a lower price level this year. At present, there is less spot in the market, mainly samples.
Times Weekly reporter learned on the spot that many jewelers are worried about inventory backlogs, and the sales strategies of Shuibei junior dealers are mostly based on demand orders, and few "hoarding" happen. "In order to prevent inventory backlogs, we basically order on WeChat, send the styles, processes and requirements that customers like to the factory, and the factory directly sends the products to the customer." A dealer told reporters that some shop owners participated in the gold jewelry exhibition in various places, and the exhibition mainly focused on "less than 10,000 yuan" products, hoping to improve their operating conditions through "small profits but quick turnover".
Source: Tukong
More than a shop owner pointed out to the Times Weekly reporter that in 2013, the phenomenon of consumers buying gold was difficult to reappear. "The market conditions are not as good as before. Before, customers' purchases were more than hundreds of thousands of yuan each time, and the purchases of 100,000 yuan this year are not much. Retail investors' consumption is also mainly based on accessories below 5,000 yuan." A dealer told reporters that this year the main consumer group is still focusing on wedding groups, and young people's overall willingness to buy gold and hoard gold is relatively low.
Many shop owners have high expectations for the upcoming National Day holiday. "It is expected that the business data during the National Day holiday will be better than usual," said a merchant. Data from the World Gold Association shows that in the first half of this year, China's gold jewelry consumption was 281 tons, a year-on-year decrease of 17% compared with 2021.
The above-mentioned merchants revealed that some merchants have begun to prepare to enter the live e-commerce platform to promote the transformation of the gold jewelry industry to the online transformation. It is expected that the retail model that combines offline entities and online sales will be one of the key directions of the future Shuibei gold and jewelry market.
World Gold Association China CEO Wang Lixin believes that in the third and fourth quarters of 2022, gold jewelry demand enters the peak season, and relevant departments may introduce a number of measures to stimulate consumption.The demand for gold jewelry market is expected to explode, which may provide additional support for gold jewelry consumption. Gold jewelry sales will rebound slightly month-on-month, but double-digit declines are still expected to occur year-on-year.
Federal interest rate hikes gold prices are suppressed
Shuibei gold jewelry market trend is also the market's weather vane.
Since the beginning of this year, the market has a strong sense of risk aversion, and investors have chosen gold as a safe-haven asset. The price of gold futures has been rising all the way, reaching US$2,078.80 per ounce on March 7, and then the price has fallen. Recently, the trend of interest rate hikes in the United States has been clear. On September 22, after the Federal Reserve announced a 75 basis point rate hike, the index strengthened to 111.28 points, a year-to-date increase of 15.96%. Gold prices fell again.
Wind data shows that as of September 23, the latest gold futures price was US$1,651.7 per ounce, down 9.77% year-on-year. The latest fixed price of spot gold is US$1,643.6 per ounce, which is at the lowest price level since the beginning of the year.
Gold price is linked to the US dollar trend, but it shows a negative correlation trend. "The prospect of further interest rate hikes in the Federal Reserve still suppresses gold prices, but the dollar's rise slows down, geopolitical tensions and concerns about global recession attract safe-haven buying, and the Fed's buying on dips has increased after hikes," said an industry insider.
ANZHEN said that gold prices may open the door to $1,600 after falling below $1,675. The dollar strengthened and COMEX's December gold futures yields rose before the Fed further rate hikes put pressure on gold prices.
Regarding the future trend of the gold market, Song Jiangzhen, director of investment at Yuebao Gold, believes that the main tone of gold prices is still falling, but the market generally believes that the possibility of a current US economic recession is gradually increasing, and the Federal Reserve may soon re-enter the monetary easing channel in the future, and inflation will also be pushed up again. Based on factors such as the cost advantage of holding positions and price fluctuations, some investors will choose to buy gold when the current price falls, resulting in a technical structural upward trend.
