After months of sideways trading, gold prices have broken out decisively to the upside in recent sessions. On August 21st, the afternoon benchmark price at the Shanghai Gold Exchange climbed to 984.86 yuan per gram, inching ever closer to the psychological 1,000-yuan threshold.
A reporter's on-the-ground visit to the Shenzhen Shuibei gold and jewelry hub, China's largest industry cluster, revealed a remarkably active two-way market. Both large-scale investment orders for gold and silver bars and consumer demand for gold jewelry are surging, with the market displaying a classic "buy on rising prices" mentality.
Spot gold in London is currently trading at $4,602 per ounce, after international prices rocketed 4.33% in a single day on August 19th. Global physical gold ETF inflows reached approximately $3 billion in July, snapping two consecutive months of outflows. The world's largest gold ETF, SPDR, has also significantly boosted its holdings, rising from 999 tonnes on July 17th to 1,047.21 tonnes by August 21st.
Where the rally began
According to Yuan Zheng, a precious metals researcher at Galaxy Futures, the direct trigger for the recent surge was the U.S. Treasury's announcement of an expanded long-term bond buyback program, which stabilized the turbulent debt market. Additionally, a string of weaker-than-expected U.S. economic data for July—spanning employment, inflation, and consumption—has reduced the urgency for further Federal Reserve rate hikes, providing further support for gold prices.
However, potential headwinds remain. Yuan cautioned that geopolitical risks represent the largest source of uncertainty. Oil prices have rebounded amid ongoing U.S.-Iran tensions, and with major countries holding low strategic crude reserves, a sustained blockade of key straits could trigger active restocking and drive oil prices higher, which would in turn create upward resistance for gold.
Shuibei market buzzing with buyers and sellers
On the morning of August 23rd, the reporter visited the Shuibei gold market in Shenzhen, where consumers were arriving in a steady stream. "Gold has risen sharply recently—not long ago it was still in the 800-yuan range per gram, but now investment gold is priced at 998 yuan per gram," one merchant noted. "Right now, there are a lot of people buying, but also a lot of people selling."
The price recovery has boosted gold jewelry consumption as well. Multiple merchants told the reporter that both buying and selling activity has intensified across the board.
Investors scoop up over half a kilo of bullion
"Yesterday, we had many clients come in to buy gold bars, and the quantities were quite large," said one gold bar seller. "Given the sharp price increase, investors are choosing to buy. One client purchased 500 grams in a single transaction, and another took 700 grams." However, selling activity is equally robust. "Gold prices are unpredictable right now—whether to buy or sell, you have to make your own judgment."
Silver is also seeing significant investment interest. One silver bar merchant displayed recent sales records: "I've sold several dozen kilograms of silver over the past few days. Many clients had been watching the charts for a long time. But compared to silver, there are still more investors buying gold."
In the jewelry section, the reporter observed a healthy number of shoppers browsing. "Weekend mornings are relatively quiet; afternoons see far more consumers," another merchant explained. "Consumers generally buy gold when prices are rising, not falling. With the recent surge, many people are coming to Shuibei to purchase gold jewelry."