International gold and silver prices faced downward pressure on Wednesday, with gold falling below the $4,500 per ounce mark. At the close, the June gold futures contract on the New York Mercantile Exchange settled at $4,448.40 per ounce, marking a decline of 1.20%.
On the 28th, spot gold broke below $4,400. As of 16:25 Beijing time, spot gold was trading at $4,392.19 per ounce.
Reports indicate that on the 28th, domestic gold jewelry prices also saw significant declines. Chow Sang Sang's price dropped by 26 yuan per gram for the day, while Lao Miao and Lao Feng Xiang gold prices fell by 22 yuan per gram. Compared to the peak in May, prices have now dropped by over 100 yuan.
Amidst the sideways movement in gold prices, several international investment banks have recently lowered their gold price outlooks. Morgan Stanley has revised its second-half target price down from $5,700 per ounce to $5,200 per ounce. Citigroup has assigned a 50% probability, its highest weighting, to a "gradual decline" in gold prices by 2026 as its base case scenario, with a target price of $3,650 per ounce.
As gold prices experience a volatile decline, market investment sentiment has also "cooled." It is reported that several banks have adjusted their gold accumulation services accordingly. On May 25, China Construction Bank released updated customer rights information and risk disclosure documents for its personal gold accumulation business, clearly adjusting the product risk level names and customer risk tolerance level names.
With gold prices currently below $4,500 per ounce, is this an opportunity to enter the market? Qu Rui, Senior Associate Director of the Research and Development Department at Oriental Jincheng, believes that for short-term trading capital, considering a modest position to take profits and exit may be appropriate. However, it is crucial to be vigilant against risks of range breakouts triggered by unexpected events and to avoid blindly chasing rallies or selling off in panic.
Currently, influenced by multiple factors, the direction of gold prices remains uncertain. Analysis and calculations by the Commodities Group of the Research Department at China International Capital Corporation (CICC) suggest that in the short term, if geopolitical tensions between the U.S. and Iran do not de-escalate and oil prices remain elevated, there is a risk that inflation concerns could further fuel expectations of Federal Reserve rate hikes. If the market prices in an additional 50 to 75 basis points of rate hikes, the floor for gold prices could shift down to the $4,300 to $4,400 per ounce range. Looking ahead, whether it's a factual de-escalation of geopolitical conflicts, a decline in oil prices easing inflationary pressures and rate hike expectations, or supply shocks leading to demand destruction and ultimately triggering safe-haven trading demand, any of these factors could potentially drive a recovery in cyclical investment demand for gold.