From July 23 to 28, gold futures prices on the New York Mercantile Exchange fell for four consecutive trading days, hitting a low of $3,300 per ounce. After opening on July 29, prices dropped from $3,313 to $3,305 before rebounding slightly.

On the 29th, the China CITIC Bank quoted the price of domestic investment gold bars at 781.80 yuan per gram. Since mid-March, the price of domestic investment gold bars has been hovering in the range of 700 yuan per gram, even briefly breaking through 800 yuan per gram at one point. Currently, the price of domestic investment gold bars has essentially remained stuck around the 700-yuan mark for over four months. How much longer will gold bar prices stay at this 700-yuan level, and will they eventually break through the 800-yuan mark in the future?

Short-term downward factors are intertwined.

The recent decline in gold prices is the result of multiple factors acting in concert.

In an interview with China News Service’s “Guoshi Zhitongche,” Zhao Qingming, Deputy Director of the Institute for Financial Information, pointed out that from a trade perspective, gold prices fell from their peak of $3,400 per ounce last Wednesday. Since the beginning of this year—especially since early April—the tariff war and the global trade conflict have become significant factors influencing gold prices. When the trade conflict intensifies, gold prices tend to rise; conversely, when tariff agreements are reached and the trade conflict eases, gold prices see a noticeable decline.

The European Union has just reached an agreement with the United States on issues such as tariffs and investment. On July 28, local time, economic and trade teams from China and the U.S. held China-U.S. economic and trade talks in Stockholm, Sweden.

Pan Helin, a member of the Information and Communications Economy Expert Committee under the Ministry of Industry and Information Technology, pointed out in an interview with China News Service’s “Guoshi Zhitongche” that with the conclusion of tariff negotiations between the U.S. and Japan and between the U.S. and Europe, market perceptions of global economic risks have shifted, leading to a decline in the popularity of gold investments as a safe-haven asset.

In terms of geopolitics, Wang Hongying, Director of the China (Hong Kong) Institute for Financial Derivatives Investment, said in an interview with China News Service’s “Guoshi Zhitongche” that currently, more risk-averse capital is adopting a wait-and-see approach. When geopolitical risks rise, gold prices tend to climb; when risks ease, gold prices fall. Over the past several years, geopolitical risks have consistently been the primary factor influencing gold prices.

Economic data and monetary policy also play a role. The improvement in U.S. employment and the rise in the U.S. dollar index are putting downward pressure on gold prices. Over the past several years, the monetary policies of major central banks worldwide have generally been characterized by excessive money supply. When monetary policies are loose, they tend to boost gold prices; conversely, when policies tighten, gold prices come under pressure.

Zhao Qingming stated that gold prices have recently reached a severely overvalued level, and there is relatively limited room for further price increases.

Long-term supporting factors remain in place.

Although gold prices are declining in the short term, there are still numerous supporting factors in the long term.

Wang Hongying believes that the structural factors underlying global economic, political, and military conflicts remain in place, making it difficult to achieve any significant structural easing amid the ongoing global economic competition. Central banks in many countries, including China’s central bank, have continued to increase their gold holdings in response to an uncertain future landscape. Since 2010, central banks have become major players and net buyers in the international gold market. The gold purchases by central banks have permanently removed this portion of gold from the market, disrupting the balance between supply and demand and driving up gold prices. From 2010 to the present, gold prices have clearly been on an upward trajectory, despite occasional setbacks along the way; overall, the general trend has been one of rising prices.

Meanwhile, the U.S. government’s debt levels have continued to expand, eroding confidence in the credibility of the U.S. dollar. Against the backdrop of a growing overall debt burden for the U.S. government, gold’s safe-haven and reserve investment attributes—combined with its inflation-resistant characteristics, particularly as high tariffs may further fuel U.S. inflation—remain key bullish factors attracting medium- and long-term capital attention.

Wang Hongying predicts that, from a long-term development perspective, political, economic, and military confrontations between countries represent a chronic contradiction lacking fundamental solutions. Therefore, in the long run, gold prices are still likely to continue their upward trend.

Investment strategies vary from person to person.

Faced with the current gold market trend, different investors should adopt different strategies.

For novice gold investors, Wang Hongying cautions that the upward trend in gold prices has persisted for many years. Although current prices continue to hit new highs, the market remains in a state of relatively high risk premium due to the influence of global structural factors—both bullish and bearish.

Short-term investors should primarily adopt a bearish trading strategy, while in the medium to long term, they should focus on buying on dips. It’s also advisable not to overuse investment leverage such as futures and options. We recommend that the primary investment strategy for short-term investors be to purchase physical gold bars or gold ETFs.

Zhao Qingming also believes that now is not the “golden period” to buy gold. New investors should be vigilant about risks and make sure they have proper stop-loss measures in place.

When it comes to choosing gold investment instruments, each option has its own advantages and disadvantages. Physical gold investments, such as gold bars, are backed by major financial institutions and manufacturing companies, offering relatively high value preservation and security. However, the transaction process involves first buying and then selling, with a rather limited range of trading methods. Moreover, when selling, the discounts and handling fees tend to be relatively high.

Zhao Qingming advises that investing in physical gold should be done with caution, as physical gold has poor liquidity and wide bid-ask spreads. Unless you have a particular fondness for physical gold, it’s not recommended to purchase it. Paper gold, on the other hand, can be bought and sold at some major banks; its trading process is relatively simple, requires low investment amounts, and allows both long and short positions. Due to its smaller capital requirements, it’s popular among investors. However, because of its convenience, paper gold also tends to lead to frequent trading, increasing the risk of operational errors and investment losses.

Domestic and international futures and options trading involve leveraged investments, and their key features make them particularly suitable for professional investors to master and utilize. Investors without prior experience should exercise caution when selecting investment products such as futures and options. In particular, gold trading in Europe and the U.S., which is priced in U.S. dollars, exposes investors to certain risks of capital losses due to fluctuations in exchange rates. Zhao Qingming believes that gold ETFs are well-suited for ordinary investors seeking long-term investments. Looking ahead, a structural upward trend in gold prices suggests that regular, systematic investments in gold ETF products could be an excellent choice.

The future trend of gold prices is fraught with uncertainty, and investors need to closely monitor key factors such as geopolitical risks, the U.S. dollar exchange rate, and central banks’ gold purchases. Zhao Qingming cautioned that investors should dynamically adjust their asset allocations, appropriately control the proportion of gold holdings, keep the share of gold assets within 15% of total assets, and establish a dynamic profit-taking mechanism. Investors should avoid treating gold as a short-term speculative instrument and instead view it as a “stabilizer” in their investment portfolios.

Pan and Lin both advise investors to participate cautiously and, whenever possible, opt for gold investment products with lower costs, such as paper gold or investment gold bars offered by domestic banks.