The global gold market has entered a period of extreme turbulence. After peaking at $5,598.75/oz on January 29, London spot gold plummeted over 21% to a low of $4,402.06/oz by February 2. Although prices rebounded roughly 5% to $4,900/oz on Tuesday, the sharp swings have triggered a wave of retail activity in China’s capital.

At the flagship store of Beijing Caibai Jewelry, the city’s leading gold retailer, hundreds of investors queued for hours on February 2 to liquidate their holdings.

Some sellers, fearful of a sustained crash, opted to lock in profits or minimize losses. One investor reportedly liquidated 2,000 grams of gold bars, walking away with approximately 2.12 million yuan (approx. $295,000).

File photo/Kong Zesi (NBD)

In response to the surge, Caibai announced a daily buyback quota to manage liquidity and security. Furthermore, starting February 6, the retailer will suspend buyback services on weekends and public holidays, introducing stricter transaction limits for individual clients.

Despite the sell-off, the price drop has attracted "bottom-fishers." While some young investors are scaling up their annual purchases to 450 grams, others remain paralyzed by the volatility. "Prices shifted significantly while I was waiting to pay," noted one shopper who eventually walked away. "The market is too unstable to jump in right now."

Financial experts suggest that the current market requires a bifurcated strategy:

Wang Hongying, Dean of the China (Hong Kong) Financial Derivatives Investment Research Institute, advises that short-term traders should prioritize risk management and consider liquidating to control losses, especially those using leverage.

Wang views the recent drop as a "technical correction" of previous overextensions. For those using gold as a family asset hedge, holding steady remains the recommended path.

File Photo/Kong Zesi (NBD)

Wu Lixian, strategist at Everbright Securities International, warns that while the mid-term upward trend remains intact due to a weak dollar and global interest rate cuts, the short-term volatility is far from over.

"Investors should not rush to 'buy the dip' immediately," Wu cautioned, noting that the market is still searching for a stable floor, likely between $4,300 and $4,500/oz.