Coronavirus sent China’s use of gold plummeting in 2020, but demand for investment products rising
- Gold consumption in China shrank 38 per cent in the first half of the year, the China Gold Association said on Tuesday
- Demand for gold, traditionally bought as a bet against inflation and extreme conflicts, started to pick up in the second quarter
Gold consumption in China, the world’s largest producer and user of the precious metal, shrank 38 per cent in the first half of the year due to the coronavirus and high prices, the China Gold Association said on Tuesday.
The use of gold in jewellery, which accounts for around two third of gold used in China, fell 42 per cent in the first six months of 2020, while consumer spending on gold coins and bars, which are generally for collection or investment purposes, fell 32 per cent.
Demand for the precious metal, however, started to pick up in the second quarter, it added. Gold is traditionally bought as a bet against inflation and extreme conflicts.
Gold trading volume has risen sharply and investors rushed to buy investment products such as gold ETFs since the role of gold as a safe heaven is in focus
While demand for physical gold remains weak, interest in and demand for gold-linked investment products, such as gold exchange traded funds (ETFs), have started to grow as Chinese investors rush to join the recent strong rally in the price of gold, the association said.
“Gold trading volume has risen sharply and investors rushed to buy investment products such as gold ETFs since the role of gold as a safe heaven is in focus,” the association said.
The price of gold has increased by nearly 20 per cent in the first six months of 2020, and the rally has continued in recent weeks to approach the key psychological level of US$2,000 per troy ounce as investors across the globe pile into the metal amid geopolitical tensions and worries about the economic outlook.