Gold prices experienced a pullback on June 24th, reversing the previous one-way upward trend. Spot gold in London continued to decline, breaking below the key support level of $4,000 per ounce, while domestic Shanghai gold futures also weakened in sync.
Looking back to the beginning of this year, the gold market was exceptionally hot, with international gold prices repeatedly hitting new historical highs. At that time, domestic investment sentiment was fervent, with investors increasing their positions in gold ETFs and purchasing investment gold bars, leading to buying frenzies at physical gold stores, and major institutions maintained a bullish outlook. However, within just a few months, market conditions have completely reversed. The weakening trend has triggered a large-scale capital exodus, leaving many investors who entered at high prices trapped in losing positions.
Tan Haojun, a part-time professor at Zhongnan University of Economics and Law, stated that the current decline in gold prices is the result of multiple factors working together, with the primary reason being the excessive rise and speculative overheating in the earlier phase. The previous sharp surge in international gold prices to levels above $5,500 created a clear valuation bubble.
Faced with the persistently weakening gold price, Wall Street investment banks that were previously collectively bullish have successively lowered their full-year gold price targets. In its latest report, Bank of America bluntly stated that the earlier set target of $6,000 per ounce has essentially no possibility of being achieved. Deutsche Bank has also adjusted its forecast, expecting the average gold price to remain around $4,300 per ounce in the third quarter of 2026. Additionally, Goldman Sachs and Citigroup have both lowered their short-term gold price expectations.
Against the backdrop of the ongoing decline in international gold prices, the domestic gold investment market has also cooled significantly. Wind data shows that the gold ETF market was hot in the first quarter of this year, with various mainstream products experiencing substantial capital inflows. Since international gold prices began their downward trend in March, gold ETFs have faced concentrated redemption pressures starting in the second quarter. Among them, the Huaan Gold ETF, the largest by size, has seen net outflows exceeding 9 billion yuan since the second quarter. The Guotai Gold ETF and the E Fund Gold ETF have both experienced net outflows surpassing 2 billion yuan during the same period, indicating significant capital withdrawal.
Tan Haojun believes that the market volatility triggered by the current gold price decline is a normal market linkage phenomenon. For ordinary retail investors, hastily entering related investments at this stage carries relatively high potential risks. Although gold remains an indispensable core asset class in portfolio allocation, possessing safe-haven attributes, the timing of entry is crucial. If the purchase price is unreasonable, investors will directly face the risk of losses from price fluctuations.
As gold prices continue to correct, market sentiment has shifted, with a wait-and-see approach becoming mainstream. Sentiment among existing investors has noticeably diverged: investors with lower holding costs remain composed, even planning to add positions in batches; while those who chased the rally and entered at high prices after missing out face the pressure of being trapped. Gold is more suitable for medium to long-term allocation and is not ideal for frequent short-term trading.