International gold prices recently experienced a roller-coaster ride. After breaching the $4,000 mark and briefly hitting a historic high of $4,380, spot gold plunged nearly $500 over seven consecutive trading sessions, temporarily dipping below $3,900 per ounce. For retail investors, this volatility has spilled over into consumer markets, with domestic gold jewelry prices widely falling below ¥1,200 per gram in China, while the Shanghai Gold Exchange’s Au99.99 contract dropped below the ¥900 threshold.

The sharp correction has refocused attention on central banks’ gold reserve strategies, with remarks from an Asian central bank official sparking debate. Benjamin Diokno, a member of the Philippine Central Bank’s Monetary Board and former governor, publicly stated that the country’s gold reserves now account for 13% of total reserves—far exceeding most Asian peers—and described the holdings as "excessive." Speaking on the sidelines of the ASEAN Bloomberg Business Summit, he suggested an ideal gold reserve ratio of 8%-12% and questioned whether selling was prudent given current elevated prices: "Shouldn’t we sell? What if prices fall?"

In contrast, South Korea’s central bank is considering its first gold purchase in over a decade. Heung-Soon Jung, head of the Reserve Investment Division at the Bank of Korea, confirmed an evaluation of medium-to-long-term buying plans, emphasizing that timing and scale would depend on market conditions, reserve trends, and gold-won dynamics. This divergence highlights the dilemma at gold’s $4,000 level—holders eye profits while sidelined investors fear missing out.

Analysts from Orient Jincheng attributed the recent pullback to technical factors, citing overcrowded long positions after September’s rally and profit-taking. Easing Middle East tensions in late October further accelerated the decline.

Nanhua Futures precious metals analyst Xia Yingying noted short-term drivers included reduced safe-haven demand and improved silver liquidity, with speculative unwinding amplifying the drop as U.S. government shutdown risks faded and trade talks progressed.

However, long-term bullish fundamentals remain intact. JPMorgan’s global commodities head Natasha Kaneva reiterated a $6,000/oz gold target by 2028, citing sustained central bank and institutional demand amid Fed rate cuts. Goldman Sachs maintains its $4,900 forecast for end-2026. Despite potential slowing to 830 tons in 2025, global central banks have net purchased gold for 16 straight years—a historically high level. Paul Fisher, chairman of the London Bullion Market Association, termed recent volatility a "speculative purge," anticipating healthier upside post-adjustment.

Xia Yingying identified December as a potential inflection point: seasonal demand trends and the Fed’s December 11 meeting—featuring updated dot plots and forward guidance—could catalyze gains if policymakers signal dovishness.