Chinese gold demand returns to growth as appetite for jewellery soars

Demand for gold in mainland China returned to growth last year thanks largely to a growing appetite for jewellery, particularly in less affluent cities, new figures show.

Consumption of the precious metal climbed 9.4 per cent to 1,089 tonnes, according to data from the China Gold Association, released on Thursday. That represents a big turnaround from a 6.7 per cent slump in demand in 2016, and means China maintains its crown as the world’s largest gold market for a fifth consecutive year.

India, in second place, probably saw its gold consumption drop to an eight-year low of 650 tonnes, according to the latest estimate from the World Gold Council in November.

Demand for jewellery in China was especially strong, rising 10.4 per cent to 696.5 tonnes, a dramatic recovery from the 19 per cent drop seen a year earlier, said the Beijing-based association. Jewellery demand is the largest contributor to the total appetite for the yellow metal in the mainland.

In 2017, appetite for gold jewellery was particularly robust in lower-tier cities as China’s newly accumulated wealth gradually spreads from affluent coastal areas to less developed regions, according to Zhang Yongtao, deputy chairman of the association.

“Gold demand could remain resilient this year – there are early signs the growth trend will continue,” he added.