Asia: Growing demand for Gold in China

The growing affluent consumers are driving up the demand for gold rings, bracelets, and necklaces. The country’s demand for gold jewellery increased 10 percent from 2017, with the increase driven by increased consumption from second and third tired cities.

Holiday seasons also boosted sales during the second half of the year. The Chinese tradition of buying gifts for Lunar New Year will also bump up prices in January and February, especially with the transition of the Year of the Rooster into the Year of the Dog in February.

Chow Tai Fook Jewelry Group, the world’s biggest jeweller by sales, predicts that the growth will continue as more people are buying jewellery as investments and not just as everyday decorative items.

Given the size of the Chinese market, rising demand in China will lead to increased global prices. Fear of inflation and weakening of the dollar pushed the price of gold in London to the highest last month since 2016.

Holdings in bullion-backed exchange traded funds are up about 40 percent in the last two years and increased to the largest stash since 2013 in January.

The growing demand for gold ties in with RFi Group data. RFi Group’s Retail Banking Council captured a 1% growth of commodities holdings among the effluent from H1 2017 to 15% in H2 2017. With 43% of the affluent likely to spend more, demand for gold is likely to rise further in the future.

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