China gold demand to slow from April surge amid decline in gift buying
Secretary-general of China Gold Association says gift buying for weddings was brought forward
Gold demand in the mainland, the world's largest consumer after India, may slow in the second half of this year after surging in April, said Zhang Bingnan, secretary-general of the China Gold Association.
"The kind of frenzied buying in late April and early May won't be repeated," Zhang said. Some of the jewellery demand earmarked for festivals or weddings later this year may have been brought forward to April and May after prices fell, he said.
Gold has declined 16 per cent this year on concern the US Federal Reserve may rein in stimulus that helped bullion cap a 12-year bull run in 2012 and as some investors lost faith in the metal as a store of value.
Gold takes centre stage in weddings in the mainland in the form of jewellery and other gifts as a promise of a long and happy future together.
Mainland consumers rushed to buy jewellery, bars and coins as a 14 per cent drop in prices in the two days to April 15 was seen as a buying opportunity, Zhang said in Shanghai on Tuesday.
Uncertainty about whether gold will fall further this year may deter some mainland investors from buying in the second half, he said. Gold slid as much as 31 per cent from a record in September 2011 up to April 16, when it set a two-year low of US$1,321.95 an ounce.
The metal traded at US$1,413 yesterday. Demand reached a record 294.3 tonnes in the three months to March, the gold council estimates.
Mainland purchases this year should be better than last year, he said. The country consumed 776.1 tonnes in 2012, little changed from the previous year, according to the gold council.
Mainland consumption reached 320.54 tonnes in the first quarter, with purchases of gold bars surging 49 per cent to 120.39 tonnes and jewellery gaining 16 per cent to 178.59 tonnes, according to the gold association.
About 6.6 million brides in the mainland will receive gold as wedding gifts this year, and more than 80 per cent of jewellery made from the precious metal in the nation is 24 carat, the council said.
"Although physical demand for gold remains strong, in our opinion this can't be relied on to provide the neces- sary push" for a rally in gold prices, Marc Ground, a com- modity strategist at Standard Bank, said in report on Wednesday.
