Gold prices saw a significant drop recently, but have stabilized today, presenting a potential buying opportunity. On March 24th, a salesperson at a Chow Sang Sang store in Zhengzhou's Erqi business district noted that while the brand's gold jewelry was priced at 1350 yuan per gram that day, a store discount brought the effective price down to approximately 1280 yuan per gram.

Just one month prior, Chow Sang Sang's gold jewelry was quoted at around 1590 yuan per gram, representing a decline of about 15% over the past month. The fluctuation in brand gold jewelry prices closely mirrors the movement of international gold prices. On March 24th, spot London gold hit a low near $4300 per ounce, after touching $4098.25 per ounce the previous day. Although prices saw a slight rebound, by March 24th, spot London gold was up only about 2% for the year, with the recent sharp decline nearly erasing its year-to-date gains.

In mid-to-late March, global financial markets experienced widespread declines, affecting stocks, most commodities except energy and chemicals, and US Treasury bonds. Gold, typically a safe-haven asset, was no exception. As of March 24th, the COMEX April gold futures contract and spot London gold both registered monthly declines exceeding 17%, while COMEX silver futures and spot London silver fell by approximately 28%. Concurrently, previously strong-performing non-ferrous metals also underwent significant corrections, with LME copper prices dropping over 9% within three months. Discussing the recent broad pullback in precious and non-ferrous metals from high levels, Cheng Xiaoyong, Deputy General Manager of the Research Center at Guangzhou Financial Holdings Futures, attributed the trend to several factors. First, the prolonged duration of the Middle East conflict has shifted market focus from inflation driven by potential oil supply disruptions to concerns about a global economic recession. Historical precedents, like the two oil crises, led to stagflation in major economies during the 1970s, characterized by high inflation, reduced consumer spending, shrinking industrial production, and slowed economic growth. IMF research indicates that a 10% rise in energy prices sustained for a year could increase global inflation by 40 basis points and slow economic growth by 0.1% to 0.2%.

Furthermore, high oil prices have fueled expectations that the Federal Reserve may pause its monetary easing cycle, potentially even shifting towards tightening next year. The March Fed meeting, as anticipated, held rates steady. The accompanying dot plot suggested only one 25-basis-point rate cut in 2026, with one official even projecting a rate hike next year. For many assets, particularly precious and non-ferrous metals, rising real interest rates inevitably increase holding costs. By March 23rd, the yield on the 10-year Treasury Inflation-Protected Securities (TIPS), a key measure of real US interest rates, surpassed 2%, a level not seen since July 21, 2025.

Additionally, markets are selling certain assets to maintain liquidity. Concerns about resurgent inflation in developed economies and a paused Fed rate-cutting cycle have led to expectations of tighter US dollar liquidity and broad financial market declines, triggering stress in private credit markets. Investors are selling holdings, including stocks and gold, to raise cash and reduce leverage.

Cheng also highlighted another concern stemming from high oil prices: central banks might sell portions of their gold reserves if their economies suffer from inflation and weakened import payment capacities due to high energy costs. The trading logic differs for non-ferrous metals like copper. For copper and new energy materials like lithium carbonate, markets might first price in demand-side shocks before considering supply issues. The Middle East conflict could impact China's solar panel exports to the region, while global economic pressures from high inflation might also negatively affect demand. Silver's significant correction follows a similar logic—demand shocks related to its use in photovoltaics. However, aluminum is initially reacting to supply concerns, as the Gulf region is a significant producer, accounting for about 7% of global output.

Looking ahead, Cheng expects the duration of the Middle East conflict to remain a key determinant for the trajectory of non-ferrous and precious metals. He believes that while the conflict has lasted longer than expected, the US, Israel, and Iran are under multiple pressures, making conditions for a potential agreement increasingly ripe. However, restoring oil supply will take time. Nevertheless, the market's focus on recessionary fears is likely to fade, shifting back to themes like AI-driven technological advancement, de-dollarization, and supply shortages for non-ferrous metals. Consequently, non-ferrous and precious metals are expected to gradually stabilize, while the rally in energy and chemical sectors may slow or even experience a significant pullback. Given the high market volatility, Cheng advises that both long and short strategies carry risks, and investors should prioritize risk hedging over making large, one-sided bets.

Huang Jiaqi, a precious metals analyst at SCI, believes gold's safe-haven attributes and role as a foundational asset remain intact. However, price volatility has somewhat dampened investor confidence, and the macro outlook is mixed. Future price direction will depend on factors related to Fed policy, including whether the Middle East situation continues to drive up energy costs, potential refunds of previously imposed global tariffs and the implementation of new tariff frameworks under discussion, and guidance from US Non-Farm Payrolls and March CPI data regarding the timing of rate cuts. Huang recommends investors carefully assess their risk tolerance, manage positions appropriately, and invest cautiously.

"The prevailing market view is that the precious metals market faces 'short-term pressure but long-term optimism,'" stated Huang Ting, a precious metals analyst from Shanghai Metals Market's Lead & Zinc Department. In the short term, before the Fed's policy direction becomes clear and geopolitical tensions resolve, precious metal prices may continue to fluctuate or face downward pressure. The market needs time to digest the impact of hawkish policy signals and await new stabilizing cues. From a medium-to-long-term perspective, the foundations supporting the gold bull market remain firm. Factors such as continued gold purchasing by global central banks, the trend towards de-dollarization, and long-term concerns about US dollar credibility persist. Many institutions view the current deep correction as a normal market adjustment and believe gold prices are likely to resume their upward trend once market sentiment stabilizes.