China’s consumers seek security in ‘the only safe asset’ as gold purchases remain strong
- Consumers in China bought 308.9 tonnes (10.9 million ounces) of gold in the first quarter, representing a 5.9 per cent increase compared to the same period in 2023
- Gold represents ‘the only safe asset’ for Chinese consumers to protect their wealth against inflation, asset price declines and geopolitical risks, analysts said
Chinese consumers are increasing their appetite for gold, seeking to protect their assets amid a volatile stock market, a depreciating yuan and property doldrums, which analysts said would continue to boost international gold prices coupled with geopolitical uncertainties.
Consumers in China bought 308.9 tonnes (10.9 million ounces) of gold in the first quarter, representing a 5.9 per cent increase compared with the same period in 2023, according to data released by the China Gold Association on Friday.
Purchases of gold bars and coins, which largely reflect investment and hedging demand, surged by 26.8 per cent year on year to 106.3 tonnes, while gold jewellery sales declined by 3 per cent from a year earlier to 183.9 tonnes.
But China’s domestic gold production rose by 21.2 per cent to only 139.184 tonnes in the first three months of the year, with 53.2 tonnes produced with imported ores or materials, indicating an overreliance on overseas suppliers.
The Chinese central bank will also continue to purchase more gold to prepare for more geopolitical turmoil ahead
“Gold represents the only safe asset for [Chinese consumers] to protect their wealth against domestic inflation, asset price declines as well as against geopolitical risks,” said Chen Zhiwu, the chair professor of finance at the University of Hong Kong.
“I expect Chinese household demand for gold to rise more in the future. And the Chinese central bank will also continue to purchase more gold to prepare for more geopolitical turmoil ahead.”