As gold prices hit a record high, gold shops are struggling to stay afloat. On a certain date, Chow Tai Fook (.) announced on the Hong Kong Stock Exchange that its retail value for the second quarter of the fiscal year (from a certain month to a certain month) decreased by % year-on-year. During the reporting period, the group closed a net of retail stores in Mainland China.

Coincidentally, the latest fiscal second-quarter report released recently by Luk Fook Holdings (.) also shows that the company's overall retail value has declined by % year-on-year, same-store sales have decreased by % year-on-year, and the number of stores has decreased by net .

In the retail market, as spot gold surged to over $ per ounce, continuing to hit new highs, the retail price of gold also broke through the price per gram. On the day of the month, the listed price at Laomiao was yuan per gram, the listed price at Chow Tai Fook was yuan per gram, and the listed price at Lao Feng Xiang was yuan per gram; on the same day, the latest price of spot gold at the Shanghai Gold Exchange was . yuan per gram.

Industry insiders told First Financial Daily that the rapid rise in gold prices, coupled with high processing fees and brand premiums for gold jewelry, has intensified consumer观望情绪, thereby curbing gold jewelry consumption to some extent and increasing sales pressure on gold jewelry retailers. The high prices and significant fluctuations in gold have increased the operational risks for gold processing and sales enterprises, prompting wholesale and retail businesses to become more cautious in purchasing, while the raw material costs for jewelry processing enterprises have risen and their shipment volumes have decreased. Some small and medium-sized processing enterprises have even halted operations and given employees time off.

From the perspective of stock price performance, as of the date, Chow Tai Fook closed at HKD . per share, while Luk Fook Holdings closed at HKD per share. Over the past month, the stock prices of these two gold jewelry companies have each fallen by more than % and % respectively.

Gold jewelry retail sales plummeted. Specifically, the significant decline in retail sales and widespread store closures have put significant pressure on Chow Tai Fook's performance. The company expects its group's revenue for the first half of the fiscal year (from month/day to month/day) to decrease by approximately % to % compared to the same period last year, while net profit is expected to decline by approximately % to %. Retail value in the third quarter of the year decreased by % year-on-year. Among them, same-store sales of directly-operated stores and franchised stores in Mainland China decreased by .% and .% respectively; same-store sales in Hong Kong fell by .%, and in Macau by .%.

Chow Tai Fook stated that in recent months, international gold prices have fluctuated significantly. The Group incurred a non-cash unrealized loss during the revaluation of its outstanding gold loans at market prices on a certain date, whereas the revaluation of gold loans at market prices during the same period last year recorded a gain, which is the main reason for the decline in net profit for the first half of the year.

Luk Fook Group's latest quarterly financial report for the fiscal year (from month to month) shows that overall retail revenue declined by % year-on-year, with a % decrease in the Hong Kong and Macau markets and a % decrease in the Mainland China market. Luk Fook Group stated that during the reporting period, the international average gold price (per ounce in USD) increased by % year-on-year, and the high gold price dampened consumer sentiment, resulting in a % decline in same-store sales for gold products, while same-store sales for priced jewelry products fell by %.

Same-store sales declines in the Mainland market (including self-operated stores and brand stores) and the Hong Kong market began to narrow from the month onwards. Luk Fook Group stated that same-store sales performance has slightly improved since the year, and although the sharp rise in short-term gold prices may affect sales, the increase in gross margin will help mitigate the impact of declining sales.

Gold jewelry demand showed significant "fear of high prices" sentiment. According to the World Gold Council, the second quarter of the year saw the lowest gold jewelry demand in the Chinese market since 2010, reaching only 90 tons. The first half of the year saw a year-on-year decrease of 55% in Chinese gold jewelry consumption, totaling 321 tons. Under the dual influence of seasonal factors and high gold prices, gold jewelry consumption may continue to remain weak in the future.

Gold Prices Continue to Hit New Highs As bullish sentiment returns, gold prices have continued to break through to the upside in recent days, setting new records. Since the beginning of the year, gold futures prices have risen by over %, reaching as high as $/ounce in recent trading sessions. In terms of positions, the latest持仓数据显示，截至年月日当周，纽约商品交易所黄金期货多头持仓增加张或.%，至张；非商业性净多头头寸增加张，至张，占比为%。

As of the date, the gold holdings of the world's largest gold fund stood at . tons, having increased by . tons from the year's low of . tons in mid-March.

Xia Yingying, Director of Nonferrous Metals at Nanhua Futures, analyzed to Yicai that the continuous record-breaking highs in international gold prices are influenced by a confluence of multiple positive factors. From a long-term perspective, the decline in the credibility of the current dollar-based credit currency system has boosted the demand for gold's traditional monetary attributes, also highlighting its anti-inflation function as a hard currency. Since the Federal Reserve initiated its rate-cutting cycle, it is still in the early stages of easing. Institutions believe that gold investment demand, sensitive to interest rates, remains in a growth cycle, and the start of rate-cutting transactions will further catalyze the rise in gold prices. Additionally, global geopolitical conflict risks are still intensifying, which also stage-by-stage boosts the demand for gold as a safe-haven asset.

Xia Yingying expects that gold will still have further upside momentum in the fourth quarter, but the uncertainty in gold prices for the year may increase, mainly due to the significant uncertainty in how the U.S. economy will land, which directly impacts the Federal Reserve's next policy choices. She analyzed that, based on the performance of the U.S. economy during the Fed's rate-cutting cycles since the year, it has fallen into recession 7 times, achieving a soft landing only 3 times. A recession path would suggest that the Fed would accelerate rate cuts and even expand its balance sheet, potentially leading to a temporary sharp drop in gold prices when recession fears emerge; a soft landing path would suggest that the Fed's monetary policy easing would be limited, which could cause gold to face some pressure from profit-taking by long positions in the year.

The upward momentum in gold is expected to continue. The price of gold has risen by more than % since the beginning of the year, and we believe that an increase in investment demand will drive gold prices further upward. UBS predicts that the price of gold could break through $/ounce in month. In the face of macroeconomic and geopolitical uncertainties, gold's hedging properties make it particularly attractive from a portfolio perspective.

In addition, Xia Yingying believes that gold is a long-term investment asset, but with the current continuous record highs in gold, the risk of chasing gains is also increasing. She suggests that investors can mitigate price risk by gradually buying in stages. From a fourth-quarter perspective, the overall adjustment in gold is expected to be limited, as the positive factors driving this round of gold price increases have yet to dissipate.