Spot gold closed at $3,995.38 an ounce on October 23, sliding below the $4,000 threshold and sparking an unexpected retail surge across major markets in China. As retail pure-gold jewelry prices fell toward 1,200 yuan per gram, shoppers crowded stores to buy physical bullion.
International Spot Gold Drops Below $4,000 as Retail Prices Fall
Global bullion markets faced sharp downward pressure when spot gold broke below the $4,000 mark to settle at $3,995.38 an ounce at the close on October 23. That decline marked a significant retreat from an earlier yearly high of $4,697.07 per ounce.
The international drop quickly transmitted to China’s domestic retail market. On October 25, major jewelry brands including Chow Tai Fook, Lao Feng Xiang, Zhou Liu Fu, Chow Tai Seng, and Chow Sang Sang implemented broad price cuts. Posted rates for pure-gold jewelry settled around 1,200 yuan (approximately $180) per gram, representing a drop of nearly 500 yuan per gram from earlier peaks this year.
Qu Rui, an analyst at Dongfang Jincheng, explained that strong US inflation data has strengthened expectations of Federal Reserve rate hikes, placing heavy downward pressure on bullion. At the same time, persistent geopolitical uncertainty has driven up crude oil prices, renewing market anxiety over inflation stickiness.
Shuibei Markets Draw Peak Weekend Crowds
Rather than driving buyers away, falling prices ignited a buying frenzy across retail hubs. The Shuibei market in Shenzhen, along with similar gold trading centers in Xi’an and Nanjing, drew peak crowds over the weekend as shoppers sought out lower raw-material costs.
Social media platforms filled with viral images and videos showing dense crowds moving through packed aisles. Observers on domestic networks described the atmosphere using vivid comparisons.
There are more people here buying gold than you’d find at a vegetable market.
Netizen, via Global Times
Merchants reported that individual buyers filled storefronts. Xu Feng, a merchant operating in Shenzhen’s Shuibei district, noted that his store is selling gold jewelry at 1,023 yuan per gram, sitting more than 70 yuan lower than the previous month’s rates. While retail concessions brought intense foot traffic, industry analysts noted that the per-gram gross margins for downstream sellers faced immediate compression.
Domestic Savings Shift Toward Physical Accumulation Plans
The retail rush extends beyond decorative jewelry. Across the country, a structural shift is taking place as households favor plain gold bars and coins over traditional ornaments, treating the metal as a reliable store of household wealth.
Consumers have increasingly utilized low-barrier accumulation plans offered by major banks to buy bullion incrementally. According to bank personnel handling these services, purchases under these schemes in the first nine months already surpassed the total for all of 2025.
This sustained retail accumulation has provided crucial support to the market as domestic equities face headwinds and returns on government bonds hit a record low. Trading activity on the Shanghai Gold Exchange reflected this physical appetite. One popular contract, Au99.99, saw volumes jump to 43 million lots last week, translating to approximately 430 tons and marking the highest level recorded since April.
Central Banks Increase Gold Reserves to Bolster Demand
Official institutional buyers continue to reinforce domestic demand. Data from the People’s Bank of China shows that the country’s gold reserves reached 77.47 million ounces at the end of September, following a monthly addition of 740,000 ounces. That milestone marked the 23rd consecutive monthly increase in official holdings.
Global institutional buying mirrors this trend. Goldman Sachs noted in a market report that central banks globally purchased an estimated 79 tons of gold in August, significantly outpacing the pre-2022 monthly average of 17 tons. Market participants point to these sovereign purchases as a stabilizing floor for bullion prices.
Domestic gold demand is increasingly running against the price trend, strengthening as prices fall.
Zijie Wu, analyst at Jinrui Futures
Wu Zewei, a specially invited researcher at Suning Bank, anticipates that gold prices will remain in a downtrend in the short term. Over the medium and long term, however, analysts suggest that once interest rate cut expectations return and real interest rates decline, bullion prices are positioned for renewed recovery.