International gold prices may remain volatile in the short term

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Reporter Liu Qi

After experiencing four consecutive trading days of gains, the international gold price has turned downward.

According to Wind data, from March 27 to April 1, London spot gold prices rose for four consecutive days, with a cumulative gain of more than 8.6%. Among them, on April 1, during intraday trading, London spot gold price broke above 4700 USD per ounce, reaching a peak of 4793.135 USD per ounce. However, the strength in the market could not be sustained. On April 2, London spot gold price opened at 4758.5 USD per ounce, briefly broke above 4800 USD per ounce in the morning, and then quickly fell. As of the time of the reporter’s release, London spot gold price was 4616 USD per ounce, with the intraday low reaching 4553.158 USD per ounce.

Gao Ji, Senior Deputy Director of Research and Development Department at Oriental Jincheng, said in an interview with reporters from the Securities Daily that the gold price’s consecutive rise in the past few days was mainly driven by a series of ongoing geopolitical conflicts releasing easing signals, the pullback in oil prices, the market’s concerns about tightening liquidity subsiding, and gold price starting to repair at lower levels.

Regarding the gold price outlook, Ding Zhenyu, a Senior Investment Consultant at Shaanxi Jufeng Investment Information Co., Ltd., said in an interview with reporters from the Securities Daily that in the short term, gold prices are highly likely to remain range-bound, with increased volatility. In the medium to long term, the bull-market logic remains unchanged under the interest-rate-cut cycle and global central bank gold purchases support. There is still a relatively high probability of breaking this year’s January high (i.e., 5598.75 USD per ounce) within the year.

“Guided by the repeated swings in expectations brought by geopolitical conflicts, gold prices in the short term will mainly continue to trade in a range, and there may be a short-term dip, but there is unlikely to be a deep correction.” Qiu Rui believes that looking at the medium to long term, the core support logic for gold has not fundamentally changed. Factors such as the long-term normalization of geopolitical and political risks, damage to dollar credit, heightened U.S. fiscal risks, and various countries’ continued gold purchases driven by strategic considerations will continue to affect the gold market and support gold prices moving higher.

Although gold prices are highly volatile, many investors also see long-term investment value in gold. Using a dollar-cost averaging (DCA) approach, they include gold in their asset allocation portfolio. Ms. Deng, who works in Beijing, told reporters from the Securities Daily that her gold DCA plan has been ongoing for more than half a year, placing a monthly DCA of 2000 yuan through a gold account opened at a bank.

“The main advantage of gold DCA is that it smooths out price volatility. By using regular fixed-amount purchases to smooth the holding cost, it effectively avoids timing risk. Especially now that gold prices are in a range-bound pattern, it reduces the impact of short-term fluctuations on investment returns.” Qiu Rui advised that under the current environment of short-term gold price consolidation and volatility, investors should set a reasonable number of monthly DCA installments based on their own income levels. In addition, investors should also avoid investment misconceptions. Gold DCA is not guaranteed profit with no losses; investors need to take price volatility rationally and allocate assets reasonably to reduce capital risk.

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