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Where is the end of the slump of gold price?

(People's Daily Online)

08:10, July 17, 2013

Gold ornaments are arranged for display at a store in Huaibei, Anhui province, July 28. (Photo/Xinhua)

In late June, the price of gold has fallen below 1,200 U.S. dollars per ounce; however, it rebounded slightly recently.

At present, financial market fluctuates by the influence of domestic and international economic situation. Under this circumstance, the price of gold, stocks and currencies goes up and down and thus, the risk of financial product is worth more attention. Here is a series of reports covering the ways and skills of personal wealth management. Through professional suggestions and analysis, we hope it can enlighten a large number of investors.

Gold prices plunged since April. However, instead of rebounding steadily, the gold price keeps decreasing in June. Why gold, which is always seen as a prudent investment product, experienced drastic price fluctuations? Will the 12-year-long bull market of gold be over? How to deal with it for investors?

"Chinese housewives"

These "Chinese housewives" - called "Da Ma" in Chinese - are mostly in fifties. They gained fame in the financial world when they “beat” mighty Wall Street moguls by purchasing a spectacular amount of 300 tons of gold jewelry, coins and bars in last quarter. Aunt Sun is one of them.

Last year, Aunt Sun got retired. Compared to the instability of stocks and funds, Aunt Sun chose gold investment finally.

Like most of Chinese housewives, Aunt Sun bought 800 grams of paper gold at the price of 280 yuan per gram in mid April, when international gold price declined 15 percent within two days. After that, the paper gold price rose to 290 yuan per gram and it brought about a profit of 8,000 yuan to Aunt Sun within a few days.

However, as time went by, Aunt Sun found herself trapped in a dilemma. In May, the gold price continued falling. What’s worse, on June 20, the international gold price declined more than 6 percent to 250yuanper gram. At that time, Aunt Sun had lost about 20,000 yuan.

Like Aunt Sun, lacking of considering the risk, many people bought gold a hedging tool for preserving monetary value. Nowadays, with the slump of gold price, gold jewelry and bullion prices go down in domestic market at the same time. It’s reported that pure gold price has dropped to 330 yuan per gram in Cai Bai Mall.

Consumers waited in a line to consult at a gold jewelry shop in Guo Hua Mall, Beijing. However, the amount of consumers who really bought gold is much less than in April. What’s more, generally speaking, consumers prefer gold jewelry to gold bars.

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