Shenzhen’s famed Shuibei bullion market has gone from overstocked to almost bare in days, as a dramatic slump in international gold prices collided with Lunar New Year buying. Retailers and bank outlets across Guangdong report that popular sizes of gold bars—from 5g to 1kg—are out of stock and that customers are queuing and snapping up whatever physical metal is available.
Shopkeepers and wholesalers describe a market split between ravenous downstream demand and cautious upstream suppliers. Vendors said they were selling rapidly at the counters but could not replenish inventories because upstream material suppliers, having bought at much higher prices, are “holding back” stock to avoid crystallising losses after the recent price collapse.
The squeeze is not confined to gold. Silver bars that traded near 30.86 CNY per gram on January 27 were quoted around 25.4 CNY per gram a week later, exposing spot-holders to nearly 5,000 CNY per kilogram in paper losses. The rapid move has forced some merchants to stop selling altogether and pushed many banks’ branch inventories to depletion, with several outlets taking orders rather than offering immediate delivery.
Market observers link the price drama to an abrupt reassessment of macro policy risk and to fragile market structure. Wu Zewei, a bank-affiliated researcher cited by local press, argued that a surprise event tied to the nomination for the U.S. Federal Reserve chair prompted expectations of a more hawkish U.S. policy stance, which strengthened the dollar and precipitated a violent unwind of crowded long positions in gold.
Price action was extreme. London spot gold approached about $5,600/oz on January 29, then plunged below $4,500/oz within days—moves amounting to the largest single-day drops since 1980—before staging a partial recovery past $5,000/oz in early February. That sequence, industry participants say, unnerved suppliers and amplified margin calls and forced selling on exchanges, further intensifying the rout.
Despite the gyrations, Chinese retail appetite has hardened. Lunar New Year gifting and a sense of a “discount” after gold’s fall have overlapped with a longer-term shift in household behaviour: more families now treat bullion as a reserve asset rather than merely jewellery. That behavioural shift, together with continued central-bank buying and geopolitical uncertainty, is cited by analysts as a structural reason why gold may retain upward pressure over the medium term.
For global markets the episode offers two lessons. First, narratives such as de‑dollarisation can accelerate speculative flows and create crowded exposures that are vulnerable to sudden news shocks; second, physical-market dynamics — local stock levels, dealer risk appetite and retail demand — can decouple materially for short periods from paper-market prices, producing frantic buying even in a falling market.
Looking ahead, traders and consumers will be watching the Fed’s policy path, margin and liquidity conditions on exchanges, and whether upstream suppliers resume selling or continue to hoard. If retail demand persists while upstream liquidity remains constrained, local premiums and delivery frictions could become a recurring feature of physical precious‑metals markets in China.