Gold jewellery prices have tumbled by approximately 400 yuan per gram, yet consumer buying interest has failed to materialise, with the gold sector experiencing a widespread selloff.

On June 8th, the gold sector faced indiscriminate selling pressure. By the market close, A-share listed companies Sichuan Gold (001337.SZ) and Shanjin International (000975.SZ) had fallen 8% and 7%, respectively.

In the Hong Kong market, gold jewellery retail stocks led the declines. Datang Gold (08299.HK) plunged over 10%, while Zijin Gold International (02259.HK) dropped 8.7%. Lao Pu Gold (06181.HK) fell 5.4% to HK$473, a decline of more than 50% from its 52-week high of HK$1,108. Chow Sang Sang (00116.HK) declined 4.4%, and Tse Sui Luen (00417.HK) was down 5.7%.

On the retail front, major jewellery brands including Chow Sang Sang, Lao Miao Gold, and Lao Feng Xiang have significantly lowered their gold jewellery prices. Current listed prices are around 1,300 yuan per gram, representing a drop of roughly 400 yuan per gram from the year's peak—a decline of about 23%, equivalent to a 24% discount.

Despite the steep price cuts, stores have not seen the anticipated surge in purchases. Instead, customer traffic remains sparse. This raises the question: why has demand not picked up even as prices fall?

Wang Yanqing, Chief Precious Metals Researcher at CITIC Futures, suggests that the pressure on precious metals performance during the week stemmed from a combination of factors. These include renewed focus on interest rate hike expectations, fluctuating geopolitical signals, and liquidity concerns triggered by corrections in US, Japanese, and South Korean equity markets, which collectively drove the significant weekend decline in precious metals.

The market's attention now turns to the upcoming release of the US core CPI data for May. The impact of US-Iran tensions on American inflation and Federal Reserve policy decisions will be further assessed. If inflationary pressures show signs of easing, it could alleviate some pressure from rate hike expectations. Conversely, persistent inflation could exacerbate the current downward trend in prices.