Inflation concerns are looming over global markets, leading to a sharp decline in jewelry prices. Banks warn of risks.

Affected by the plunge in international gold prices during the night market, on March 20, domestic gold jewelry prices fell sharply, with multiple brands’ gold prices dropping to around 1440 yuan per gram, a decrease of about 100 yuan over two days. Among them, Chow Tai Fook (01929.HK) reported a price of 1447 yuan/gram for pure gold jewelry, down 56 yuan from the previous day’s 1503 yuan/gram, a total drop of 98 yuan over two days; Lao Miao Gold’s pure gold jewelry was reported at 1445 yuan/gram, down 53 yuan from the previous day’s 1498 yuan/gram, a total drop of 105 yuan over two days; Chow Sang Sang (00116.HK) reported 1443 yuan/gram for pure gold jewelry, down 49 yuan from the previous day’s 1492 yuan/gram, a total drop of 104 yuan over two days; Lao Feng Xiang (600612.SH) reported 1443 yuan/gram for pure gold jewelry, down 55 yuan from the previous day’s 1498 yuan/gram, a total drop of 97 yuan over two days.

On March 19 local time, concerns about inflation triggered by the significant rise in energy prices overshadowed global markets. Investor panic spread, leading to the selling of risk assets and precious metals for cash, coupled with the dollar index fluctuating above 100, further suppressing precious metal prices. As of 9:05 PM Beijing time, the April gold futures price on the New York Mercantile Exchange was reported at 4577.50 USD, with a decrease of 6.51%.

On March 18 local time, the Federal Reserve announced that it would maintain interest rates, a decision that met market expectations. In the statement on the same day, the Fed mentioned that the impact of the Middle East situation on the U.S. economy remained uncertain, and the uncertainty surrounding the U.S. economic outlook was still high. Fed Chairman Powell pointed out at the Fed’s press conference on Wednesday that the current decline in U.S. inflation had not met expectations. The shocks brought about by the soaring oil prices due to the Middle East war would ultimately exert some downward pressure on consumption and employment while pushing up inflation, which would undoubtedly put pressure on the U.S. economy.

On March 20, the Industrial and Commercial Bank of China issued a notice titled “Tips for Managing Risks in the Precious Metals Market,” stating that due to the complex evolution of global macroeconomic and geopolitical factors, domestic and international precious metal markets are experiencing increased volatility. To ensure the safety of investors’ assets and stable investments, the Industrial and Commercial Bank of China advised: Please maintain a calm and rational investment mindset, fully assess your own risk tolerance, and avoid being driven by short-term market emotions to blindly chase highs and cut losses. From a long-term asset allocation perspective, it is recommended that investors adhere to the principles of “overall control, phased entry, and diversified layout,” and smooth out phase volatility risks by extending the investment cycle to build a more robust asset portfolio.

However, CITIC Securities pointed out in its latest research report that the mid-term trend of gold prices after each Middle Eastern conflict still depends on the factors of dollar credit and liquidity. Looking ahead to this round of conflict, it is expected that the continuation of two major trends: liquidity easing and weakening dollar credit will continue to drive up gold prices. Historically, the advantages of valuation or stock price percentiles tend to strengthen the upward space of the gold sector, and currently, the PE valuation levels of leading companies have fallen to historical lows of 15-20x. Considering the high synchronization of stock price peaks and gold price peaks in recent years, we are optimistic about new highs in gold prices driving new highs in stock prices.