Gold has once again fallen below $4,000, leaving those who chased the rally at high prices in a dilemma: facing a floating loss of $100,000 and checking the gold price dozens of times every day.

"Back then I thought gold would keep rising steadily, preserve value and hedge against risks, but I never expected to buy at the peak. Now I don't even have the courage to open my investment account," investor Yanyan (pseudonym) told Jiemian News on the 15th. Earlier this year, she successively purchased more than 330 grams of bank accumulative gold, but almost all her purchases were made at high price points.

The international spot gold price has continued to pull back recently, once again falling below the $4,000 per ounce mark. Compared with the year-to-date historical high of $5,598.75 per ounce at the beginning of this year, the maximum drawdown has approached 28%. What has become of the investors who followed the trend and entered the market at the peak of gold prices earlier?

"Invested 390,000 yuan, with a floating loss of 100,000 yuan"

At the start of this year, the international gold price surged all the way, with nonstop voices on social media claiming that "gold has entered a major uptrend" and "the price will hit $6,000 by the end of the year".

Yanyan bought 200 grams of bank gold bars for the first time in mid-January, at a transaction price of about 1,150 yuan per gram. In the following two weeks, the gold price kept climbing, and she added two more purchases at around 1,200 yuan per gram, eventually pushing her average holding cost to roughly 1,180 yuan per gram. She spent over 390,000 yuan in total on the three gold bar purchases.

"At that time, I thought gold was a hard currency that would definitely rise in the long run, and the earlier I bought it, the more cost-effective it would be," Yanyan recalled. She saw news that global central banks had been continuously increasing their gold holdings, and believed that "following this trend would not lead me wrong".

However, the market did not continue to rise as expected. Since March, the gold price has fluctuated repeatedly, and began to fall at an accelerated pace in late April. Now the domestic investment gold price has dropped to around 880 yuan per gram. Yanyan's floating loss on each gram of gold she holds exceeds 300 yuan, with a total floating loss of over 100,000 yuan.

What makes Yanyan even more tormented is the dilemma in her operations. "If I cut my position and take the loss, the money I lose would be enough for my whole family to travel several times. If I choose to add positions to average down the cost, I'm afraid the gold price hasn't hit the bottom yet, and the more I add, the deeper I get trapped."

At present, she plans to hold her positions at least until the end of the year, hoping that the gold price can rise back above 1,000 yuan per gram. "The bank account manager said gold is still bullish in the long term, so I'm treating this investment as a fixed deposit," Yanyan said.

Another investor, Liu Tian (pseudonym), is also caught in the same "dilemma" as Yanyan. In the first quarter of this year, she bought physical gold bars while purchasing bank accumulative gold at the same time.

Liu Tian's motivation to enter the market came almost entirely from the "emotional hype" on social platforms. At that time, many financial bloggers on short video platforms frequently posted screenshots showing that "they earned 20% per month through regular gold investment", and the headlines were filled with slogans like "not buying gold now is just like not buying a house ten years ago". After being repeatedly influenced by these contents, she bought 100 grams of bank accumulative gold at a price of about 1,100 yuan per gram in mid-January, when the gold price was in an uptrend.

Seeing the gold price keep rising, at the end of January, Liu Tian bought 50 grams of physical investment gold bars at a price of about 1,230 yuan per gram. The two investments cost her a total of about 171,000 yuan.

50-gram investment gold bar, provided by the interviewee

"I originally planned to make long-term regular investments, but I was afraid of missing the market rally, so I put in all the money I had prepared for six months of regular investments at once," Liu Tian said.

Liu Tian said that after the gold price kept falling, she had to refresh the gold price trend page dozens of times every day. "All my friends know that I bought gold. Now that the price has dropped so much, I'm too embarrassed to bring up the topic of investment."

Liu Tian has tried various solutions: she consulted a bank wealth manager, who suggested "adding positions in batches to bring down the average cost". She also considered redeeming all her holdings and accepting the loss, but she was unwilling to face the loss when seeing the amount of money lost. "The money lost is enough to buy a luxury designer bag. If I redeem it, the money is really gone. If I don't redeem it, there's still hope of recovering the loss."

In order to reduce her holding cost, Liu Tian recently bought another 20 grams of investment gold bars at a price of about 888 yuan per gram. Up to now, she holds a total of 170 grams of gold investment products, with an average holding cost of about 1113.29 yuan per gram. Calculated based on the current base investment gold price of 880 yuan per gram, she still has a floating loss of nearly 40,000 yuan.

"Now I've figured it out. I'll try my best to bring down the cost and hold the positions for the long term, because selling them now means I will lose money. The returns from other wealth management products are not high either, so it's better to keep my money in gold. Even if the price doesn't rise back later, the gold can be left to my son for his marriage in the future. If the price drops to 600 yuan per gram later, I might buy more," Liu Tian said.

Experts: Do not blindly bottom-fish

Some investors choose to hold their positions, while others have successfully taken profits at peaks and bought at dips multiple times.

On January 29 this year, investor Li Hua (pseudonym) sold 60 grams of gold bars at 1,246 yuan per gram, and successfully cashed out more than 74,000 yuan after deducting handling fees.

Then, seeing the gold price pull back, Li Hua successively bought 200 grams of gold bars in batches in February, and sold all of them in March this year at an average selling price of about 1,160 yuan per gram.

Since he added new positions after each sale, Li Hua finally made a profit of about 35,000 yuan from his physical gold bar investment. Li Hua said that physical gold is more suitable for band trading, rather than long-term blind holding. The core of his trading strategy is to sell when market sentiment is extremely overheated, so as to avoid market uncertainties. "I never thought of getting rich overnight with gold. It's enough to make a profit without losing money," Li Hua said.

"Compared with the beginning of the year, the gold price is already very low now. If it falls further later, I will consider buying more," Li Hua said.

In response to this round of gold price correction and the future trend of the market, Wang Hongying, dean of the China (Hong Kong) Financial Derivatives Investment Research Institute, told Jiemian News that the recent weak performance of gold is mainly due to the previous rise in crude oil prices that fueled inflation concerns. The market is betting that the Federal Reserve has room to raise interest rates, and the rising real interest rate of U.S. Treasuries and the strengthening U.S. dollar are putting downward pressure on the gold price. In addition, after the core CPI of the United States fell in June, the expectation of interest rate hikes cooled down rapidly. Combined with the marginal weakening of the safe-haven support brought by geopolitical conflicts, the gold price has been under continuous downward pressure in the earlier period.

Wang Hongying believes that from a technical perspective, the gold price is likely to fluctuate repeatedly around the $4,000 per ounce level. There is strong technical support and capital backing in the range of $3,900 to $3,950 per ounce, and the probability of a further sharp drop in the gold price is relatively small.

In Wang Hongying's view, for gold investors who are trapped at the high price points in the earlier period, they should adopt differentiated trading strategies according to their own position structure and risk tolerance: investors of leveraged-free spot gold, paper gold and gold ETF can hold their positions patiently and wait for the market to evolve; while investors holding high-leverage positions such as futures and options should put risk control in the first place, and it is more prudent to appropriately reduce their positions to lower the holding risks.

Wang Hongying believes that the current $4,000 per ounce is the short-term value central range of gold prices. Ordinary investors should generally remain on the sidelines, and should not blindly enter the market to bottom-fish. The bearish factors that are suppressing the gold price in the short term have not been fully digested, while the medium and long-term structural bullish forces are still accumulating. Although many countries' central banks continue to increase their gold holdings to consolidate the bottom support, the monetary policies of major overseas economies still have uncertainties, and market inflation expectations are fluctuating repeatedly.

"Overall, the short-term bearish pressure has not faded away, and the trend bullish signal has not yet been confirmed. It is recommended that investors maintain a cautious wait-and-see attitude and participate in gold investment rationally," Wang Hongying said.

This article is from the WeChat official account "Jiemian News" (ID: jwview), written by LI Ziman, and published with authorization from 36Kr.