Spot gold breaks below $5,000 mark, global central banks' gold-buying momentum slows

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 publication, London gold closed at $4,993.15 per ounce, down 0.5%.

Domestically, the AU9999 price on the Shanghai Gold Exchange retreated. According to JiJie News on March 16, a survey of major brand pure gold jewelry prices found that retail prices 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 on March 19, which is 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 meeting is the core meeting where the U.S. Federal Open Market Committee decides monetary policy, mainly balancing 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 expected this year. Any deviation in signals could trigger a single-day surge or plunge of over $50 in gold prices.

On the news 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 announced early morning local time that they launched a large-scale attack on facilities in Tehran, Iran; explosions were heard in Tehran early morning. At the same time, Israel’s military reported monitoring Iranian missile launches and intercepting them. Air raid sirens have sounded in multiple areas in 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 the U.S. 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 gold price fluctuations 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.

Although short-term gold prices fluctuate, institutions remain optimistic about the long-term trend. 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, stating that gold is entering a super cycle, with central bank demand continuously strengthening, and safe-haven and investment demands potentially lasting long-term.

Goldman Sachs has significantly raised its gold price forecast in its latest research report, raising the December 2026 gold price projection from the previous $4,900 per ounce to $5,400, 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 factors, 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; the Fed’s 50 basis point rate cut 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, maintaining related hedging demand and supporting high gold prices.