May Day Gold Price Rollercoaster: Drops Below $4,500/Ounce and Rebounds, What’s Next?

　　21st Century Business Herald reporter Feng Zitong 

　　When seeing news of the gold price rebounding to $4,500/oz, Ms. Dong excitedly opened the gold accumulation page on her mobile banking app. In her view, the opportunity to “buy the dip” and make a profit seemed to have arrived again.

　　There are quite a few investors who share Ms. Dong’s thoughts. During the May Day holiday, international gold and silver prices continued to fluctuate. On May 4th, spot gold briefly fell below the $4,500/oz mark, hitting a new low for the month. Faced with such market moves, some investors decisively increased their positions, others anxiously waited on the sidelines, and some who chased high prices at the start of the year found themselves sleepless at night due to paper losses.

　　Why has the gold price become a roller coaster? Is there still opportunity ahead?

　　

　　During this May Day holiday, the international precious metals market experienced two sharply contrasting market rounds.

　　According to Wind data, from May 1 to May 5, COMEX gold and COMEX silver fell by 1.47% and 1.3% respectively. Impacted by geopolitical factors, the biggest plunge occurred on May 4, with COMEX gold down 2.41% that day. Spot gold dropped to as low as $4,499.92/oz (UTC+8), hitting the lowest point in almost a month. Silver saw even greater declines, with COMEX silver plunging over 4% on May 4 alone.

　　The gold price sudden drop caught many heavily invested buyers off guard. Mr. Liu, an investor, told the reporter that he bought some investment bars early this year. As the price has fallen lately, on May 4 his portfolio showed an unrealized loss of nearly 6,000 yuan. “Every day I struggle with whether to accept the loss; if I sell, it’s a real loss, but if I don’t, I worry the price will drop further.” Luckily, with a rebound towards the end of the holiday, his losses gradually narrowed.

　　On May 5th, there were signs of easing between the US and Iran, spot gold rebounded to $4,555/oz (UTC+8). In Asian trading on May 6th, gold prices continued climbing and returned above the $4,600/oz line. As of publishing, the spot gold price was about $4,690/oz (UTC+8).

　　On the domestic consumption side, the holiday was overall subdued. Brand gold jewelry prices generally fell below 1,400 yuan/gram around May 1, with Chow Tai Fook quoting 1,392 yuan/gram on May 5 (UTC+8). However, the price drop did not spark a buying frenzy. “Many people came to inquire, but few actually bought. People still prefer to ‘buy on the rise not the dip’,” a gold sales representative told the reporter.

　　

　　Facing the roller coaster prices during the holiday, one phenomenon confusing many investors is: as the Middle East situation escalates, why hasn’t gold surged, but instead hit new monthly lows?

　　Qu Rui, Deputy Director of Research and Development at China Chengxin International, analyzed for 21st Century Business Herald:

　　Previously, the market generally believed the Federal Reserve might cut rates twice in 2026. However, on April 30, the Fed meeting held rates steady at 3.50%-3.75%.

　　On this, Qu Rui analyzed that this decision was in line with market expectations and the decision was already fully priced in beforehand. She further stated that maintaining rates this time did not have a trend-level suppressive effect on medium-to-long term gold price expectations, only a marginal impact, nor will it change gold’s core pricing logic.

　　

　　For mid-to-long term allocation funds, she believes gold’s core value lies in hedging sovereign credit risk, stagflation risk, and geopolitical uncertainty. Short-term liquidity shocks have not altered the medium and long-term upside support. Pullbacks actually provide a better opportunity to build positions, which can be smoothed through periodic investing to manage short-term volatility risk, while adhering to a long-term allocation philosophy.

　　For short-term trading capital, it’s important to closely track three main pricing variables: real yield on the dollar, geopolitical situation, and Fed policy expectations. Investors should pay attention to position sizing and stop-loss/take-profit strategies, avoid blindly chasing highs when bullish sentiment is crowded, and also be alert to unexpected liquidity shocks triggered by geopolitical events and policy statements.

　　

Morgan Stanley downgraded gold to “tactically underweight” in its May 3 report, believing the Fed’s hawkish signals and the likelihood of easing geopolitical tensions are undermining gold’s upward drive. Goldman Sachs maintained its forecast that gold prices would reach $5,400/oz by the end of 2026. Bank of America continued to be bullish, raising its average gold price forecast for 2026 to $5,093/oz and keeping its 12-month target at $6,000/oz.

　　Qu Rui believes that gold will remain in a pattern of short-term wide fluctuations and medium-to-long term upward trends. In the short run, with a back-and-forth geopolitical situation, increasing internal differences within the Fed, and rapid shifts in market sentiment, gold is likely to continue wide swings, with the possibility of periodic corrections.

　　

; the prolonged US-Iran conflict exacerbates US fiscal sustainability concerns, challenges the structural integrity of the dollar’s credit system, strategic gold buying by global central banks, and stagflation risk pushing the Fed toward monetary policy shifts. These four key supports will continue to propel gold prices higher.

Editor: Cao Ruitong