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Summary:"The price of gold has risen too fast. It should be the highest point in recent years."

On July 17, the skyrocketing gold price was as hot as the continuous high temperature. On the first floor of Paris Spring in Wujiaochang, the reporter saw that major gold shops have revealed the latest unit prices of pure gold jewelry: Luk Fook 753 yuan/gram, Lao Miao 751 yuan/gram, Lao Feng Xiang 748 yuan/gram... Although major brands have launched promotional activities ranging from 40 yuan to 50 yuan per gram, the counter staff all said in unison: "The gold price has risen too fast, it should be the highest point in recent years."

Luk Fook brand offers a price of 753 yuan per gram for pure gold jewelry. Photo by Wu Weiqun

The unit price of Lao Miao pure gold jewelry is 751 yuan/gram. (Same as above)

Indeed, the price of gold has reached a new level without anyone noticing. On July 17, Wind data showed that spot gold had broken through $2,480 per ounce, reaching a high of $2,482.35 per ounce, setting a new record high. Fueled by the international market, the official website of the Shanghai Gold Exchange showed that on July 17, the Shanghai gold price reached 581.09 yuan per gram in the morning session and closed at 577.33 yuan per gram in the afternoon session, and the unit price of pure gold jewelry rose accordingly.

This round of sharp rise in gold prices began in early March this year. The price of pure gold jewelry ended the situation of hovering around 630 yuan/gram in January and February this year. In just one week, it soared to around 650 yuan/yuan. Since then, the price of gold has been like a wild horse that has run away from its reins and cannot be stopped at all. It easily passed the 700 yuan/gram mark. During the Qingming Festival this year, Aunt Li bought a 50-gram pure gold bracelet for herself at the Lao Feng Xiang counter. The unit price at that time was 705 yuan/gram. "It has risen by more than 2,000 yuan in just over three months. Fortunately, I made up my mind to buy it at that time."

Why can’t this round of price increases be stopped? Industry analysts believe that gold is priced in US dollars in the international market, which means that the price of gold depends on the US dollar. Generally speaking, when the US dollar appreciates, the price of gold falls, and vice versa, when the US dollar depreciates, the price of gold rises.

According to Xinhua News Agency on July 17, data released by the U.S. Department of Labor earlier this month showed that the U.S. unemployment rate rose by 0.1 percentage point month-on-month to 4.1% in June this year, the highest since November 2021. The U.S. consumer price index rose 3.0% year-on-year in June this year, a 0.3 percentage point narrower increase from May, showing signs of continued slowdown in inflation.

Therefore, Jan Harcius, chief economist of Goldman Sachs Group, called in a research report released on July 15 that the Federal Reserve should announce a rate cut during the monetary policy meeting at the end of July. Fed Chairman Powell also emphasized on July 15 that the latest data strengthened the Fed's confidence that the US inflation rate is falling back towards the established target of 2%. He said that if the job market is found to be unexpectedly weak, the Fed will take action. Market observers pointed out that Powell's declaration of attention to the job market is another signal that the Fed is close to cutting interest rates.

Bearish people believe that the continuous rise in gold prices is related to the continuous "buying, buying, buying" by major central banks. However, according to the Economic Daily on July 15, in May this year, against the backdrop of rising international gold prices, the People's Bank of China ended its "18 consecutive increases" since November 2022 and suspended its gold reserves.

Regarding the central bank pressing the "pause button" on gold reserves, industry insiders said that the main reason was that the international gold price has remained in a historically high range this year, and the central bank chose to stop increasing its gold reserves due to considerations of the high gold price, changes in market expectations, and the need to control costs.

Whether bullish or bearish, rigid demand always exists. A salesperson at a Paris Spring brand gold shop told reporters that since July and August are originally off-seasons for consumption, and the price of gold has continued to rise, many customers have been "persuaded to leave" in recent days, but some customers who come to buy "three golds" and "five golds" are still very determined. "In order to retain them, our brand has not only launched discounts comparable to those on May 1st and National Day, but also loosened the policy on gold exchange: if you exchange pure gold jewelry from other brands, you used to have to pay 30% more, but now you only need to pay 10%." - For example, if you exchange 10 grams of pure gold jewelry from another brand for this brand, you used to have to buy at least 13 grams (3 grams), but now you only need to buy 11 grams (1 gram).

A certain brand of gold shop launched limited-time promotions such as gold foil exchange and hand-woven ropes.

In recent years, in addition to the function of preserving value, pure gold jewelry has also been accepted by more and more young consumers because it reflects the national trend culture. Unlike their parents' enthusiasm for buying "big items", braided rope bracelets embellished with small gold jewelry have become the favorite of young consumers. The reporter saw in this brand gold shop that in order to cater to this consumption trend, they launched the "50% limited time discount for on-site braided bracelets" activity. "There are many college students in the Wujiaochang area, and we will increase publicity efforts to encourage young consumers to buy gold braided rope bracelets that reflect their personality."