Gold fell from $3,400 to $3,211! Analysts predict that the market may continue to fall in the future?

The most popular gold among Chinese people experienced significant volatility in April, with gold prices surging to $3,400 last month before sliding to $3,211, as reported by Economictimes. The price drop could be influenced by the easing of global trade tensions, coupled with China's May Day holiday, during which the market was closed. As the world's largest gold supporter, China sold more than it bought, creating a short-term liquidity vacuum.

Economictimes noted that the focus will be on next week's US Non-Farm Employment Report to assess future economic prospects. Last week's data showed that the US economy was sluggish in the first quarter, with businesses adopting a wait-and-see approach regarding Trump's tariff sanctions and potential developments. As many companies imported large quantities of goods before tariff sanctions and consumers rushed to stockpile, the US March personal consumption index remained relatively stable. All eyes are now on the upcoming Non-Farm Payrolls Report. Federal Reserve policy makers stated that interest rates will remain unchanged unless there are clear signs of inflation dropping to 2% or continued deterioration in the job market.

Analysts believe that Trump's recent statement about conducting goodwill trade negotiations with countries like China, India, Japan, and South Korea has somewhat eased global trade tensions, boosting investor confidence and driving them back to high-risk financial products, which contributed to the gold price decline.

Trade Tensions Ease, Gold Profits Retreat

Bob Haberkorn, Senior Market Strategist at RJO Futures, believes there are signs that the US and China are about to reach a trade agreement, with China beginning to engage with the Trump administration. This has led to the warming of risk-based financial products, causing traditional safe-haven assets like gold to experience profit-taking.

Trump Indicates Trade Agreements with China and Japan

Trump stated he might reach trade agreements with China, India, Japan, and South Korea, calling it a good opportunity to make a deal with China. Additionally, according to Reuters, Chinese official media social media accounts claimed that the US has contacted China to negotiate Trump's 145% tariffs. Investor panic has gradually subsided, with a return to high-risk investment markets.

China's Long Holiday Triggers Liquidity Vacuum

TD Securities reported that gold experienced a liquidity vacuum due to China's long holiday, which occurs when the bid-ask spread of financial instruments widens and transaction costs become too high.

Is Gold Still the First Choice for Value Preservation Investment?

Gold's position remains intact. Ole Hansen, Commodity Strategy Head at Saxo Bank, believes that market sentiment has caused short-term gold profit-taking, but the structural drivers supporting gold remain solid and reliable.

Gold is currently priced at $3,241.36, growing only 3.69% in the past thirty days, but 17.53% over the past six months. Compared to previous growth rates, gold's increase is not as rapid. In contrast, Bitcoin, dubbed "digital gold," has grown 14.65% in the past month. In summary, gold may not necessarily experience another sharp decline, but overall data suggests its profit growth is quite slow. This is a pure market observation and not investment advice.