London Spot Gold Plunges Over 2.6%, Downward Pressure Persists
May 13 (Reuters) - Under close scrutiny from global financial markets, the London spot gold market experienced significant volatility on May 12, with prices tumbling more than 2.6% in a single day. Market participants widely anticipate further downside potential.
The trading session began with a lower opening for London spot gold, and by the afternoon fixing, prices had dropped to $3,235.4 per ounce. This sharp decline not only heightened investor vigilance but also sparked extensive discussions within the financial sector.
From a market perspective, the unexpected easing of tariff risks is considered a key driver behind the gold price slump. Recent signs of moderation in global trade tensions have significantly alleviated the risk-off sentiment that previously fueled demand for gold as a traditional safe-haven asset. With tariff concerns diminishing, investors have reduced their exposure to gold, shifting capital toward other assets with higher return potential.
Analyzing market trends, this gold price drop is not an isolated event. Over the past period, gold prices fluctuated within a certain range due to global economic uncertainties. However, as tariff risks eased, market expectations shifted noticeably. Technically, gold breached multiple critical support levels, further reinforcing bearish sentiment. Many technical analysts believe the current price action indicates sustained downward pressure in the near term, with bears dominating the market.
From a policy standpoint, central banks' monetary policy trajectories have also indirectly impacted the gold market. Against the backdrop of a gradually recovering global economy, some central banks are considering tightening liquidity. This policy outlook has pushed market interest rates higher, reducing the appeal of non-yielding assets like gold. Consequently, investors have been prompted to offload gold holdings, accelerating the price decline.
For gold-related industries, the sharp price drop has multifaceted implications. Gold mining companies face profit compression as lower prices reduce revenue from product sales. Meanwhile, the jewelry sector is also affected, as consumers may delay purchases in anticipation of further price declines.
Looking ahead, although the market generally expects gold to remain under downward pressure, financial markets are inherently uncertain. Should tariff tensions resurface or global economic recovery stall, reigniting safe-haven demand, gold prices could rebound. However, given the current landscape—marked by easing tariff risks and monetary policy adjustment expectations—the London spot gold market is likely to face continued downside pressure in the near term. Investors should closely monitor market developments and exercise caution in their investment decisions.
