In the early hours of November 16, based on local time, London witnessed a significant decline in gold prices, closing at $2562.72 per ounce. This marked a 0.06% decrease and represented the sixth consecutive day of declines. Over the week, gold has seen a cumulative drop exceeding 4%, resulting in the largest single-week decline since mid-June 2021. Analysts attribute these fluctuations primarily to the strengthening US dollar, which has continued to rise due to shifting market expectations regarding interest rate cuts by the Federal Reserve. The dollar index recently reached heights not seen in over a year, exerting considerable pressure on international gold prices.

During this week, the spot price of gold in London plummeted to a low of $2536.66 per ounce, reflecting a more than 9% drop from its historical high of $2790.07 per ounce recorded on October 31. In terms of weekly performance, gold faced a decline of 4.52%, marking its largest weekly decrease since June 2021. Additionally, silver also experienced a slip, with London spot silver prices falling 0.64% to $30.235 per ounce, marking a weekly decline of 3.37%.

On the COMEX, gold futures fell by 0.21% to $2567.4 per ounce, while weekly losses were pegged at 4.73%. Silver futures on the same exchange saw a decrease of 0.77%, settling at $30.335 per ounce, marking a weekly dip of 3.54%.

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Importantly, this ongoing trend of decreasing precious metal prices has coincided with dwindling bullish sentiment within the market. Data from the Commodity Futures Trading Commission (CFTC) indicated that as of the week ending November 12, speculative positions in COMEX gold net long positions dropped by 24,385 contracts, now totaling 197,362 contracts—the lowest level in 14 weeks. Additionally, long positions in COMEX silver have dwindled to 24,061 contracts, the lowest they have been in over eight months.

George Saravelos, head of foreign exchange strategy at Deutsche Bank, noted that the underlying dynamics affecting gold prices can largely be traced to the dollar and pinpointed three primary concerns: firstly, there is currently no apprehension regarding US credit risk. Should fears arise over the excessive fiscal deficit, fiscal primacy, and a loss of central bank independence, gold prices would likely surge. Secondly, the demand from central banks for gold reserves is on the decline. Recent macroeconomic shifts may pressure several emerging market currencies, compelling some central banks to employ their dollar reserves to shield their foreign exchange from capital outflows, potentially diminishing gold demand. Lastly, the dollar continues to be the preferred safe-haven currency; despite waning public sector demand for dollar assets, net demand from the private sector is escalating.

Nonetheless, Saravelos projected a bullish outlook on gold's performance in the medium term.

Analysts further elaborated that the drop in gold prices from their heights correlates closely with the rebound in the dollar index and US interest rates. Concurrently, expectations of diminishing risks from geopolitical conflicts have also posed a negative outlook on gold prices. While short-term expectations remain constrained, analysts noted that investment demand for gold persists. They remain optimistic about the long-term trajectory of precious metals, particularly in light of the Fed's interest rate cut cycle.

Historically, gold has performed robustly during periods characterized by rate cuts.

According to Huaan Fund, there are four key factors likely to support the performance of gold: First, tariffs lead to slower economic growth while increasing inflationary pressures, as the Fed's rate-cutting cycle continues, making gold a hedge against inflation. Second, tariff policies exacerbate de-globalization trends that weaken dollar reserves proportionately, driving global central banks to increase their gold purchases. Third, expanding debt pressures impact the creditworthiness of the dollar, simultaneously pushing the Fed towards rate cuts. Finally, the decentralization of currency will elevate the standing of alternative currencies.

However, Allianz Investment voiced that any sustained attack on the Fed could accelerate the trend toward de-dollarization. If the independence of the Fed is undermined, instilling unease in investors, there may be a shift towards preferring other safe-haven currencies like the yen or Swiss franc over the dollar. Consequently, both gold and traditional defensive currencies, such as the Swiss franc and yen, could benefit.

Notably, the decline in international gold prices has prompted a corresponding decrease in the price of gold jewelry in China, with some retailers reporting that the price per gram has fallen below 700 yuan.

On November 14, the Shanghai Gold Exchange issued a notice indicating that due to the continued significant fluctuations in precious metal prices, all member organizations should remind investors to take precautionary measures against risks, control their positions judiciously, and invest rationally.

Interestingly, the drop in gold prices has spurred an increase in sales. Staff members at a shopping center in Guangzhou reported a 10% rise in gold jewelry sales, with investment pieces, particularly 1-gram gold nuggets, proving particularly popular. Gold bars, weighing 10g, 20g, and 50g, have been selling out continually and restocked frequently.

Gold analysts emphasize that in the medium to long term, with heightened global economic uncertainties and the approach of year-end demands, gold price volatility is likely to remain significant, hence consumers should exercise caution in their investments.