Gold prices in the domestic market are once again approaching the 1,000 yuan per gram milestone after several months of volatility. Data from the Shanghai Gold Exchange shows that the afternoon benchmark price for gold on August 21 had climbed to 984.86 yuan per gram, edging ever closer to that psychologically significant level.

On the morning of August 23, a visit to Shenzhen's Shuibei gold and jewelry market — the largest industry cluster of its kind in China — revealed a steady stream of consumers purchasing gold. "Gold prices have risen significantly recently. Not long ago, the per-gram price was still in the 800-yuan range, but now investment gold is priced at 998 yuan per gram," one merchant noted, adding that both buyers and sellers are active in the current environment.

Merchants Report Investors Purchasing Over Half a Kilogram in Single Orders

The recent price rebound has revitalized gold jewelry consumption. Multiple merchants interviewed at the Shuibei market indicated that the number of customers both buying and selling gold has increased notably. "Yesterday, we had many customers purchasing gold bars, and the quantities were substantial," said one gold bar seller. "Due to the sharp rise in gold prices, many investors chose to buy, with some customers purchasing 500 grams or even 700 grams in a single transaction." However, sellers of gold are equally prevalent, with another merchant commenting, "Gold prices are unpredictable right now — whether to buy or sell depends entirely on your own judgment."

Beyond gold, silver has also attracted significant investor interest. A silver bar merchant showcased recent sales data, revealing, "We've sold dozens of kilograms of silver over the past few days. Many customers had been watching the market for a long time. Still, gold investors far outnumber silver investors."

In the gold jewelry section, a large number of consumers were observed browsing and selecting pieces. "Weekend mornings are relatively quiet; the afternoon brings even more customers," one retailer explained. "Consumers tend to buy gold when prices are rising, not falling. With the recent surge, many people are choosing to come to Shuibei to purchase gold jewelry."

What's Driving the Gold Price Surge?

Gold prices are typically heavily influenced by international factors. Spot gold in London has reached $4,602 per ounce, with a particularly notable single-day surge of 4.33% on August 19. The price recovery has also coincided with improved inflows into global physical gold ETFs. According to the World Gold Council, global physical gold ETFs saw inflows of approximately $3 billion in July, reversing two consecutive months of outflows.

Additionally, the world's largest gold ETF, SPDR Gold Shares, has significantly increased its holdings, rising to 1,047.21 tonnes as of August 21, compared with 999 tonnes on July 17. "The sharp rise in international gold prices on August 19 was directly triggered by the U.S. Treasury's announcement to expand its long-term bond buyback program, which stabilized the volatile bond market. This market-rescue move directly contributed to the surge in gold prices," explained Yuan Zheng, a precious metals researcher at Galaxy Futures.

Furthermore, weak U.S. employment, inflation, and consumption data for July have diminished the urgency for the Federal Reserve to continue its rate-hiking cycle, adding further upward pressure on gold. However, factors that could push gold prices lower also persist. "Geopolitical tensions remain the biggest source of uncertainty at present," Yuan noted. "Oil prices have rebounded recently due to ongoing U.S.-Iran disputes. With major countries holding low crude reserves, a sustained blockade of key straits could trigger active restocking demand, pushing oil prices higher — which would create headwinds for gold."