On January 29, the spot price of gold in London surged past $5,590 per ounce, setting a new record high before abruptly reversing into a sharp decline. The price closed at $5,377.14 that day. By the close on January 30, it had plunged 9.61% to $4,860.39. The downward trend continued on February 2, with the price falling to $4,656.46, after hitting an intraday low of $4,401.58. Following three consecutive days of losses, gold prices rebounded, closing above $5,000 per ounce on the 4th. However, prices fell again on the 5th, dropping 3.81%, and were trading around $4,863.27 by 5:00 PM on the 6th.
This volatile price action has left domestic retail investors and consumers feeling anxious and facing difficult choices: should they take profits and exit the market to wait and see, or seize the opportunity to buy on dips? Recently, in several cities including Beijing, Nanjing, and Guangzhou, queues have formed outside some gold retail stores. Some individuals are rushing to "buy the dip," while others are choosing to sell their holdings to "realize their gains."
The gold market is witnessing heated activity on both the buying and selling sides. On the first weekend following the sharp drop in international gold prices, a long queue formed outside the Lao Pu Gold store in Guangzhou's TaiKoo Hui shopping mall. A customer in line mentioned that the store's prices for plain gold jewelry were relatively low. She had visited earlier when it was less crowded but couldn't find the style she wanted due to limited stock. With the recent price drop, she returned but was surprised by the crowd.
In contrast, the Chow Sang Sang store in Panyu District's Asian Games City Plaza had only a few customers. The storefront displayed promotions for high-price gold buybacks and was decorated with festive red envelopes. On weekend evenings, some customers browsed gold jewelry and inquired about prices, but there was no sign of a rush. A store employee noted that prices had indeed pulled back and were lower than a few days prior, but it was difficult to predict future movements. Prices might increase again if the market turns bullish.
"The extreme volatility of the past week has certainly drawn attention from the community, especially during the first two or three days of the price decline. We saw customers who were new to buying gold bars, others looking to sell old gold, and many purchasing wedding jewelry, given that we are near the end of the Year of the Snake, a traditional peak wedding season. We are also offering promotional discounts," said Zhong Ziran, Deputy Manager of the Business Department at Dongshan Department Store.
"Our frontline sales staff have been extremely busy. Previously, even when prices were high, they could manage a lunch break. But during the days of highest volatility, lunches had to be postponed," Zhong added. Over the past week, jewelry sales volume increased by 25% compared to mid-to-late January. The largest single jewelry transaction involved 263 grams of gold, totaling over 360,000 yuan.
Amid the price swings prompting both buying and selling, some gold trading platforms have faced liquidity issues. On January 18, Shenzhen Jie Worui Jewelry Co., Ltd. and several associated online platforms encountered redemption difficulties. On January 31, the "Yun Dian Dang" platform issued notices stating that due to a concentrated wave of redemptions, its accounts were temporarily frozen by the bank, leading to a suspension of payments, and that it was working to resolve the issue with the bank.
"When purchasing gold, it's advisable to choose established, reputable companies and conduct transactions in physical locations to ensure better fund security," advised Zhu Zhigang, Chief Analyst and Supervisor of the Guangdong Gold Association. In the absence of unified standards for gold buyback services, consumers should avoid chasing the lowest price without regard for credibility. It is essential to select vendors with proper qualifications, physical storefronts, and good reputations, such as brand flagship stores or counters in major shopping malls.
Two Gold Stocks Double in Value
While the retail gold market buzzes with activity, the sentiment among gold investors has been fluctuating with the market's volatility. "I first bought a gold-themed ETF the year before last, when returns from other funds were generally poor. I thought gold could provide some stability," said Mr. Huang, a resident of Guangzhou. He held the ETF for over half a year, sold after making a profit of over ten thousand yuan, and then bought back in late last year as gold prices surged rapidly. Individual investors like Mr. Huang, reacting to the sharp swings in international gold prices, are not uncommon.
On January 30, the trading prices of gold-themed ETFs, such as China Gold ETF, E Fund Gold ETF, and Bosera Gold ETF, fell significantly, accompanied by substantial capital outflows. Several funds saw single-day net outflows exceeding 1 billion yuan. For instance, one major gold ETF experienced inflows of 10.553 billion yuan but outflows of 14.460 billion yuan on January 30, resulting in a net outflow of 3.907 billion yuan.
As gold prices staged a strong rebound, several gold stock ETFs and gold-themed ETFs rose on February 3, although some funds still recorded net outflows. Guotai Gold ETF saw a net outflow of 2.91 billion yuan, Huaan Gold Easy ETF had a net outflow of 2.04 billion yuan, and E Fund Gold ETF experienced outflows of 1.092 billion yuan. On February 4, as international gold prices climbed back above $5,000 per ounce, gold-themed ETFs continued their rebound.
Data from Tonghuashun iFinD shows that as of February 3, all 53 gold-themed funds in the market had recorded gains. A Gold Stock ETF led with a surge of 29.73%, followed closely by Huaan SSE-SEHK Gold Industry Stock ETF and Guotai CSI SSE-SEHK Gold Industry Stock ETF, both up 29.26%. Eighteen funds achieved gains exceeding 20%, 27 funds saw increases between 10% and 20%, and 8 funds had gains below 10%.
The strong performance of gold stock ETFs is closely linked to the popularity of gold-related concepts in the A-share market. Classified by Shenwan third-level industry, the total market capitalization of 10 gold concept stocks reached 695.410 billion yuan by February 3, surging 36.36% over the past month. All 10 stocks have gained year-to-date, with two stocks doubling in price: Xiaocheng Technology rose 113.80%, and Sichuan Gold advanced 101.22%.
Experts Advise Rational Gold Allocation
Why has gold continued its upward trend? "Gold possesses three key attributes: monetary, financial, and commodity. The recent long-term bullish trend primarily reflects its monetary attribute, especially against a backdrop where the US dollar-dominated international monetary system faces multiple challenges and geopolitical tensions are high. Central banks worldwide have been consistently adding gold to their reserves. These three factors have combined to highlight gold's monetary role, and its investment attribute has amplified the price movements," explained Zhu Zhigang.
In a report released on January 29, the World Gold Association mentioned that in 2025, the total value of global gold demand soared to an unprecedented $555 billion, a 45% year-on-year increase. The core drivers behind the surge in investment interest remain safe-haven demand and asset diversification. Global central bank gold purchases reached 863 tonnes, hitting the upper end of expectations, while global gold ETF holdings increased by 801 tonnes, marking the second-highest annual inflow on record.
The report indicated that in 2026, tense geopolitical situations are likely to again be a critical factor influencing gold prices and are expected to continue supporting robust central bank purchasing demand, strong inflows into gold ETFs, and steady demand for gold bar and coin investment. Concurrently, several foreign investment banks, including Goldman Sachs, Morgan Stanley, and UBS, have significantly raised their target prices for gold.
"The general consensus remains bullish on the future outlook, as the fundamental factors driving gold prices have not changed," Zhu Zhigang added. After breaking through $5,500 per ounce, prices experienced a significant correction, briefly falling below $5,000 before recovering above that level. In the short term, if prices can break above $5,200, an upward trend might re-establish itself. Failure to breach this level could lead to further consolidation or even a retest of recent lows.
An industry insider from a large fund company in Southern China cautioned that gold is not a risk-free asset. Investors with low-risk tolerance might consider allocating a portion, around 5% to 10%, of their portfolio to physical gold, such as gold bars, as a hedge against inflation and currency depreciation. For investors with higher risk tolerance, holding physical gold could be complemented by strategically purchasing gold ETFs, potentially using a dollar-cost averaging approach to avoid buying at peaks.