If the international gold price falls sharply, it will not cause any serious economic consequences. However, the sharp drop in international gold prices can often reveal some signals of financial asset price changes. The premise of this logic is that the phenomenon of falling gold price is a "result" and a signal, but it is not a "cause" that causes serious consequences.

If the international gold price falls sharply, it is basically because the demand for gold is less than the supply of the market, or the demand for gold is less than the demand expectation originally thought by the financial market. When the international gold price falls sharply, we often see the rise of the US dollar index. After all, the pricing currency of the international gold price is the US dollar, and the US dollar index is generally inversely proportional to the international gold price. When the US dollar index rises, it is usually when the US monetary policy is relatively tightened. In the market trend of more than ten years, this phenomenon often appears in the stage of the Fed raising interest rates and shrinking the table.

If the Fed starts to raise interest rates and shrink its balance sheet, global financial markets will face the expectation of asset liquidity recovery. Under this expectation, all dollar-denominated financial assets may fall or even plummet. The price of gold is an "observation post" for observing commodity prices. The decline of international gold price will often bring a harbinger of bear market to commodity futures market. Although other commodities may not follow the decline at the beginning of the decline of gold price, if the decline of gold price is persistent, the futures prices of other commodities may also be dragged down by the international gold price. Therefore, if the international gold price collapses, we can take it as a signal that the central banks of major countries in the world have entered the "interest rate hike to cope with the inflation cycle".

In addition, gold also has private collection needs. In many areas of our country, gold ornaments are still a necessity for traditional ceremonies such as marriage. Therefore, if the international gold price plummets, the domestic gold jewelry price is likely to go down at the same time. In this case, many families who are going to buy gold ornaments will get financial concessions. However, in this case, listed companies that own gold mines and produce gold products may have to accept poor annual performance.