Spot gold breaks below $5,000 mark, global central banks slow gold purchases

On the morning of March 16, spot gold and London gold once rapidly plunged, breaking below $5,000 and dropping to a low of $4,966, down 1.04%. During the same period, silver also briefly fell below $80.

As of the time of writing, London gold closed at $4,993.15 per ounce, down 0.5%.

Domestically, the AU9999 price on the Shanghai Gold Exchange retreated. According to Jiemian News on March 16, the retail prices of major brand pure gold jewelry generally declined, averaging around 1,550 yuan per gram; among them, Chow Tai Fook pure gold jewelry was quoted at 1,557 yuan per gram, Chow Sang Sang at 1,547 yuan per gram, and Lao Miao Gold at 1,552 yuan per gram, all lower than the previous day.

Analysts say the core factor triggering this round of decline is the upcoming Federal Reserve FOMC meeting, scheduled for March 19, which will be the focus of this week. Previously, gold prices had risen significantly, accumulating a large amount of short-term profit-taking. Ahead of this key meeting, some funds chose to exit and wait, increasing selling pressure.

The FOMC is the core meeting of the U.S. Federal Open Market Committee, responsible for setting U.S. monetary policy. Its main task is to balance economic growth and inflation through interest rate adjustments. Market focus has shifted to the probability of rate cuts in June and the number of rate cuts within the year. Any deviation in signals could trigger a single-day surge or plunge of over $50 in gold prices.

On the geopolitical front, military actions by the U.S. and Israel against Iran continue, with no signs of easing tensions in the Middle East. On March 16, according to CCTV News, reporters learned that the Israel Defense Forces claimed to have launched a large-scale attack on facilities in Tehran, Iran’s capital, early that morning; explosions were reported in Tehran at dawn. At the same time, the Israeli military said it detected missiles launched by Iran and was conducting interceptions. Air raid alerts have sounded in multiple parts of central Israel.

According to Xinhua News Agency, U.S. President Trump threatened in a phone interview with the Financial Times on March 15 that if NATO allies do not take action to help keep the Strait of Hormuz open, NATO will face a “very bad” future.

On March 13, the World Gold Council announced that by January 2026, global central banks’ net gold purchases reached 5 tons, slowing from the monthly average of 27 tons in 2025. Due to fluctuations in gold prices and holiday factors, some central banks may have temporarily slowed their gold buying. However, given the ongoing geopolitical tensions with little sign of easing, it is likely that central banks will continue to increase their gold holdings in 2026 and beyond.

Despite short-term fluctuations, institutions remain optimistic about long-term prospects. Morgan Stanley believes that if geopolitical tensions persist, gold prices could reach $5,700 per ounce in the second half of this year. Huachuang Securities also remains bullish on long-term gold prices, considering gold entering a super cycle, with central bank demand strengthening, and safe-haven and investment demands potentially continuing long-term.

Goldman Sachs has significantly raised its gold price forecast in its latest research report, adjusting the December 2026 gold price forecast from previous levels of $4,900 per ounce to $5,400 per ounce, an increase of over 10%. Goldman Sachs believes that private investment in gold is accelerating, which could be a key driver of unexpected gold price increases. Among these, central banks in emerging markets are continuously diversifying their reserves, with an expected average monthly purchase of 60 tons in 2026, contributing 14 percentage points to the increase; a 50 basis point rate cut by the Federal Reserve in 2026 will boost Western gold ETF holdings, contributing 3 percentage points; and macro policy risks related to global fiscal sustainability are unlikely to be fully resolved in the short term, with related hedging demand expected to remain stable, supporting gold prices at high levels.