Gold prices fell below $4,200. How should we view this round of pullback?

Recently, international gold prices have experienced a significant drop, with the spot price of London Gold once breaking below the $4,200 per ounce mark, significantly increasing short-term market volatility. Facing such a situation, many investors are questioning: Are assets like gold and gold mining still worth holding? Should we buy or sell now? (Data source: Wind, as of March 23, 2026)

I. Why is gold under short-term pressure?

Looking at the reasons behind the fluctuations, the Federal Reserve's March interest rate decision was the direct trigger for this round of gold price adjustments, maintaining the federal funds rate target range unchanged at 3.50%-3.75%. Due to the rise in oil prices caused by Middle Eastern geopolitical conflicts and an increased risk of inflation rebounding, the Fed was forced to delay its rate-cutting process. This statement shattered the market’s previous optimistic expectations of rapid rate cuts in the first half of the year. Additionally, influenced by related geopolitical situations, short-term safe-haven funds flowed into the US dollar, coupled with some liquidity needs, collectively amplifying the volatility of gold prices.

II. Has the rationale supporting gold changed?

In the short term, market sentiment and capital games have driven price fluctuations; however, from a medium- to long-term perspective, the underlying value logic of gold has not been broken:

1. The trend toward diversification in the global monetary system continues, with central banks around the world continuously increasing their gold reserves, and the de-dollarization process has not reversed;

2. Global debt pressure remains high, and gold, as an asset without sovereign credit risk, still possesses a scarce safe-haven attribute;

3. Geopolitical uncertainty has become normalized, and gold still plays an important role as a “stabilizer” in asset portfolios.

In other words, the factors triggering short-term corrections in the gold price are primarily adjustments in market expectations and disruptions in capital flows, which have not undermined the fundamental logic of gold's long-term allocation.

III. How should we respond now?

In the face of short-term volatility, what investors need most is to remain rational.

1. Do not blindly follow short-term fluctuations: Market sentiment tends to be amplified during extreme market conditions; chasing gains or cutting losses can easily lead to substantial losses. It is advisable to adopt a long-term perspective.

2. Revert to your own allocation needs: Ask yourself: What was the original intention behind allocating assets related to gold? Was it for risk hedging, portfolio diversification, or as part of long-term savings? As long as the underlying logic remains unchanged, short-term volatility does not alter its allocation value.

3. Avoid impulsive actions: In an increasingly divided market environment, frequent trading often backfires. Waiting for market sentiment to return to rationality might be a more prudent choice.

Fluctuations in financial markets are the norm. What truly weathers cycles is not the precise capture of every fluctuation, but a profound understanding of the essence of assets.

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