This week (June 5–12), the global gold market experienced a deep correction, with both international and domestic gold prices weakening in tandem. Gold had seen a strong rally in the first half of the year, with international prices briefly touching a record high above $5,500 per ounce and domestic prices surging alongside them. However, starting June 5, gold prices entered a rapid downward trend, breaking through multiple key price levels in just a few trading days; this quickly erased the majority of the year's accumulated gains and fueled market panic. Although prices rebounded briefly toward the end of the week, the overall bearish trend remained intact, and the market has entered a short-term phase of consolidation and bottoming out. This report provides a comprehensive analysis of this week's gold market performance, considering price action, market sentiment, supply and demand, and macroeconomic factors.

I. Price Trends This Week and the Retracement of First-Half Gains

(A) International Gold Prices

International gold prices followed a "surge and retreat" pattern during the first half of the year. Prices climbed steadily from the start of the year, peaking at $5,500 per ounce—an all-time high—marking significant gains for the period. The trend reversed in June; on June 5, prices turned downward from a high of $4,353 per ounce. Within four to five trading days, they broke through the $4,300 and $4,200 marks, subsequently falling below the $4,100 level on June 10–11. This rapid decline wiped out the vast majority of the gains achieved earlier in the year, effectively retracing the year-to-date rise. On June 12, international gold prices staged a modest rebound, climbing back above $4,200 per ounce (with an intraday high of $4,240) and narrowing the overall decline, though the week as a whole was characterized by a sharp drop.

(II) Domestic Gold Prices

As of June 12, the benchmark gold price tracked by SunSirs stood at 890.33 RMB/gram, marking a daily decline of 2.60% and a cumulative drop of 9.45% from the 983.22 RMB /gram recorded at the beginning of the month. Looking back at the first half of the year, domestic gold prices surged in tandem with international markets, reaching periodic highs well above current levels. This week, domestic spot prices closely mirrored international trends; the price remained above 970 RMB/gram on June 5 but subsequently fell for several consecutive days, hitting a weekly low of 885.1 RMB/gram on June 11. The maximum weekly decline approached 9%, wiping out a significant portion of the gains accumulated earlier in the year. Towards the end of the week, domestic spot prices rebounded slightly alongside international rates, with mainstream spot quotes in Shanghai recovering to 914.97 RMB/gram; however, the overall price level for the week shifted notably lower.

By category, investment gold bars and raw gold materials saw consistent declines. Branded gold jewelry experienced a slightly smaller pullback than raw materials due to processing premiums, though prices still fell significantly from their yearly highs. Gold prices across different regions of the country showed strong correlation, with regional price differentials remaining within normal ranges and no significant localized divergence in price movements.

II. Market Trading and Inventory Status

The rapid drop in gold prices this week triggered a dramatic shift in market sentiment. Initially, panic selling increased, leading to a surge in available supply and a short-term uptick in spot trading activity. However, as prices continued to slide, a "wait-and-see" attitude became dominant; capital was cautious about "buying the dip" at lower levels, causing overall trading activity to cool down gradually.

Regarding inventory, domestic gold stocks remained generally stable, with no significant accumulation or depletion observed in commercial or exchange inventories. Stocks that had been stockpiled at high prices earlier in the year gradually entered the market during the decline, yet there was no large-scale, concentrated dumping of goods. Globally, the physical gold market operated normally, with physical inventories remaining stable across countries and no issues regarding supply shortages or severe overstocking.

III. Domestic Demand Performance

Domestic gold demand showed significant divergence this week. On the investment demand side, the rapid price decline has widened paper losses for holders who entered the market at higher price points, significantly cooling investment enthusiasm and causing a sharp drop in new investment orders; a "wait-and-see" sentiment prevails. While some capital—cautiously stocking up at lower levels—has tentatively entered the market via small orders, no concentrated "bottom-fishing" trend has emerged.

Regarding physical consumption, demand for gold jewelry and gift items remains resilient. The price pullback has attracted some end-consumers to stores, leading to a slight recovery in offline retail sales compared to the previous period, though no panic buying has occurred. Demand for industrial gold remains stable; sectors such as electronics and precision manufacturing are purchasing based on actual needs, with procurement paces remaining unaffected by short-term price fluctuations. Overall, demand-side factors are struggling to provide effective upward support for gold prices.

IV. International Macroeconomic and External Factors

Gold prices underwent a deep correction this week, driven primarily by expectations regarding overseas macroeconomic policies. The current policy mix of high interest rates and balance sheet reduction abroad has kept the US dollar relatively strong; as a non-interest-bearing asset, gold’s appeal continues to wane in a high-interest-rate environment, acting as a key bearish factor suppressing prices.

Meanwhile, multiple variables continue to influence market trends. On one hand, fluctuations in overseas inflation data are shaping market assessments of future monetary policy, with expectations of easing inflation intensifying downward pressure on gold prices. On the other hand, the volatile situation in the Middle East has periodically triggered safe-haven buying, limiting the extent of the price drop—a key reason for the slight rebound following this week's sharp decline. Additionally, continued gold purchases by global central banks provide a long-term floor for prices, partially offsetting the impact of macroeconomic headwinds.

V. Interconnectedness Across the Supply Chain and Related Categories

The dynamics within the gold industry chain are clear. At the upstream mining and smelting stages, production costs remain relatively stable, and the supply of mined and recycled gold is steady; the absence of significant price swings in raw materials means this segment has not contributed to the current price correction.

Downstream, prices for categories such as gold jewelry, gold handicrafts, and industrial gold track spot gold prices closely. Jewelry brands have lowered retail list prices in response to raw material cost changes, though there is a lag in adjusting end-product prices, resulting in narrower profit margins. Precious metals such as silver are highly correlated with gold; this week, they mirrored gold's pattern of an initial sharp decline followed by a modest rebound, reflecting a consistent trend across the precious metals sector.

VI. Outlook

Following this deep correction, the gains gold achieved in the first half of the year have largely been erased, leaving limited room for further significant declines. Given the current market environment, gold prices are likely to fluctuate and establish a bottom within the $3,800–$4,200 per ounce range, with the corresponding domestic benchmark price trading between approximately 870 and RMB 930 per gram. While the market may still experience intermittent dips, downside support is gradually strengthening, signaling that the phase of sharp, one-way declines has essentially come to an end.

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