China’s gold demand back on growth track, led by sales of bullions and wedding jewellery
China’s demand for gold, excluding the central bank’s purchases, rose 15.5 per cent in the first three quarters to 815.9 tonnes.
China’s appetite for gold has resumed, as a stronger-than-expected economic growth boosted confidence in gift-giving and increased the demand for wedding jewellery, while a crackdown on remittances diverted the country’s investors to park their capital in the precious metal.
Total demand, including jewellery, bullions and industrial gold but excluding the central bank’s purchases, rose 15.5 per cent to 815.9 tonnes in the first three quarters, according to the China Gold Association’s data. That’s a reversal from the same period in 2016, when demand fell 12.8 per cent.
Jewellery sales led the increase in volume, with demand rising 7.4 per cent to 503.9 tonnes, compared with a 20 per cent slump in the same period last year.
“There are signs that gold jewellery demand is back on a growth track this year,” said the association’s deputy chairman Zhang Yongtao. “The momentum is partly due to recovering prices since the beginning of the year, and more young consumers tying the knot, particularly in China’s smaller cities, which boosted demand for wedding jewellery.”
Newlyweds in China, especially the bride in villages or lower-tiered cities, are typically decked out in gold jewellery, as conspicuous displays of social status and fortune. With China’s economy growth accelerating to 6.9 per cent in the first three quarters, a -so-called accelerator effect has been created ti increase spending, he said.
Demand for bullions grew at the fastest rate by percentage, jumping 44.5 per cent during the period to 222 tonnes, keeping their allure as an investment option while the Chinese government maintained its curb on property investments and kept a tight leash on capital remittances.
Total demand this year in China, the world’s largest market since 2013, may top 1,000 tonnes, surpassing last year’s 6.7 per cent dip to 975.38 tonnes.
Meanwhile, production of the precious metal dropped 10 per cent in the first three quarters to 313 tonnes, as an ongoing drive for raising environmental protection standards curtailed output in Shandong, Jiangxi and Fujian provinces.