What should you consider when buying gold as the price becomes a roller coaster ride?

In recent times, the price of gold has been experiencing a roller coaster-like trend. In mid-September, the price of gold jewelry in China briefly exceeded 600 yuan/gram. However, during the National Day holiday, international gold prices plummeted, leading to a decrease in the price of gold jewelry in China. With the continuous escalation of geopolitical tensions, international gold prices have rebounded recently. So, how is the price of gold jewelry in China performing currently? Is it a good time to invest?

Consumers who are interested in gold investment are aware that Shuibei in Shenzhen is the largest trading center for gold jewelry in the country, and its prices are linked to international gold prices. Compared to other gold jewelry stores, the prices at Shuibei tend to be relatively low.

On October 15th, journalists from Dahe Finance visited several gold jewelry stores in Shenzhen and noticed that at the China Gold store located at East Gate old street in the Luohu district, the price of gold jewelry was 499 yuan/gram. For jewelry priced at a standard rate, customers could enjoy a discount of 500 yuan for every 1,000 yuan spent. At the Jinxiangfu store in the Shuibei Jinzuo market, the price of gold jewelry was 465 yuan/gram. It can be observed that the current price in the Shuibei market is higher compared to the price on August 28th, when it was 458 yuan/gram.

A month ago, on September 15th, journalists visited the Liufu Jewelry store in the Shenzhen University Town and noticed that the price of gold jewelry at Liufu was 614 yuan/gram. At that time, several other gold jewelry stores also had prices exceeding 600 yuan/gram. The staff at the store informed the journalists that due to the approaching National Day holiday, the store had a good flow of customers. They mentioned that the buyback price for gold jewelry was around 450 yuan/gram, and because of additional processing fees, the actual buyback price would be slightly lower. Although gold jewelry can retain its value, they suggested that customers should prioritize purchasing gold jewelry for personal use, while gold bars and similar items could be used for investment purposes.

It is worth noting that from October 16th to 17th, there was a slight decline in COMEX gold settlement prices, with the price dropping 0.36% to 1927.3 US dollars/ounce as of the time of writing.

On October 17th, when journalists visited the Chow Tai Fook and Chow Sang Sang stores at the Shixia Times Plaza, the price of gold jewelry was 599 yuan/gram for Chow Tai Fook and 579 yuan/gram for Chow Sang Sang. Although the prices had decreased compared to the previous high levels, they were still relatively high.

As for the main reasons for the recent fluctuations in gold prices, Wu Zewei, a researcher at Xingtu Financial Research Institute, told the journalists that the previous decline in international gold prices was primarily due to better-than-expected US economic data, which intensified concerns about the Federal Reserve raising interest rates. The yield on US Treasury bonds reached new highs, suppressing the performance of gold. In the medium and long-term, the key to the gold price rise depends on the duration, scope, and intensity of conflicts in the Israeli-Palestinian region. With the intensification of geopolitical conflicts, central banks around the world are increasing their allocation to gold, which means there is still potential for the price of gold to increase.

Huaxi Securities believes that the current monetary policy of the Federal Reserve is expected to maintain a wait-and-see stance on data trends in the short term, which would limit the impact on gold prices before the next interest rate meeting. With frequent geopolitical risks, gold remains the preferred safe-haven asset, and it is expected to have further room for growth.

On another note, the first batch of China Securities Index Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETFs was recently approved, with Huaxia Fund and Yongying Fund being the first to obtain approval. This development has also increased market attention on gold stocks.

China Galaxy Securities pointed out that these newly approved ETFs are index products that encompass publicly listed companies in the gold industry chain. Compared to gold investments, they offer more flexibility. Many fund managers, such as Jiashi, GF, ICBC Credit Suisse, and Guotai Fund, have also applied for similar products, which are currently in the queue for approval. It is expected that there will be more products of this type in the future.

Regarding the recent large fluctuations in gold prices, Wu Zewei also stated that the short-term trend of gold prices is highly uncertain. However, in the long term, gold still has good investment value. Investors should pay attention to choosing the investment channels that suit them best, buy at low prices, and avoid chasing high prices.