Golden sea­son for jew­elry sales

China Daily (Canada) - - CHINA - BY WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

In Yuyuan Gar­den, one of the largest gold jew­elry hubs in Shang­hai, 54-year-old Cai Xiaolin fi­nally had time to take a nap af­ter lunch on Thurs­day.

“Many con­sumers came to choose gold rings, bracelets and ear­rings for Christ­mas and New Year. Some are buy­ing gifts while oth­ers are buy­ing in bulk for in­vest­ment,” said Cai, a sales as­sis­tant at Lao­miao Gold.

The new wave of gold buy­ing at the year-end came amid a slump in the price of the pre­cious metal.

Gold prices have plunged some 30 per­cent over the past 12 months, the fourth largest fall in one year since the 1970s.

Un­like the gold craze in April when China’s con­sumers pur­chased 300 met­ric tons within two weeks af­ter the price slumped, this time the hot sales were mainly driven by hol­i­day con­sump­tion, said gold sell­ers.

Ac­cord­ing to the World Gold Coun­cil, de­mand for gold in China rose 22 per­cent yearon-year in the first quar­ter of 2013 driven by in­creased sales of bars, coins and jew­elry.

China Min­sheng Bank es­ti­mated that the coun­try’s ex­plo­sive de­mand for gold will push its gold con­sump­tion up 30 per­cent year-on-year to a record 1,050 tons in 2013.

Cai said her store’s rev­enue reached 70,000 yuan ($11,500) on Wed­nes­day, com­pared with an av­er­age of 30,000 yuan.

On Thurs­day, the av­er­age price of pure gold at her store was 308 yuan per gram, ex­clud­ing pro­cess­ing charges.

In a neigh­bor­ing store the av­er­age price was down to 293 yuan per gram, al­most 20 per­cent lower than the be­gin­ning of the year.

Zhang Ting, a 47-year-old Shang­hai res­i­dent, said she pur­chased 200 grams of gold bars at 345 yuan per gram early this year, but she does not re­gard the in­vest­ment as a fail­ure.

“As long as I don’t sell them at a lower price, I’m not los­ing money,” said Zhang.

An in­creas­ing num­ber of Chi­nese are pur­chas­ing gold with a pas­sion. They are seem­ingly still sit­ting tight while fac­ing the slump.

“In China, an in­ter­est­ing fea­ture of the gold mar­ket is you can hardly tell in­vest­ment in gold apart from gold con­sump­tion. Buy­ers can swiftly shift their hold­ings from one cat­e­gory to another,” said Cao Xiaorui, di­rec­tor of jew­elry, Far East, for the World Gold Coun­cil.

In the third quar­ter, China’s gold jew­elry de­mand went up 29 per­cent de­spite a down­turn in global de­mand.

China’s gold mar­ket is march­ing at its own pace, said Cao.

In Shen­zhen, China’s largest gold jew­elry ex­hi­bi­tion and whole­sale hub, about 200 new gold jew­elry dis­play cen­ters opened in the third quar­ter, show­ing the mar­ket’s strong con­fi­dence.

The ex­pand­ing mid­dle-class is one of the ma­jor driv­ing forces be­hind the rock­et­ing gold de­mand, said an­a­lysts.

“In­vest­ing in gold bars and coins is con­sid­ered long-term, and an in­creas­ing num­ber of in­vestors are re­al­iz­ing that gold is ideal to hedge risks, and put 5 to 10 per­cent of their as­sets into gold,” said Yang Fei, a Shang­haibased gold prod­uct an­a­lyst.

Sev­eral in­vest­ment banks fore­cast a sub­dued price for the yel­low metal. While Gold­man Sachs es­ti­mates $1,050 an ounce in 2014, Stan­dard Char­tered, UBS and Com­merzbank an­tic­i­pate gold will end 2014 with an av­er­age price of $1,200 to 1,300, ac­cord­ing to their re­ports.

The price of gold hov­ered a lit­tle above $1,200 on Thurs­day.

China’s de­mand for gold may be sub­dued in 2014, said an­a­lysts.

“Cau­tion is war­ranted in ex­pect­ing that the im­port growth of 2013 will be re­peated next year. Over the medi­umterm, ris­ing real in­ter­est rates and poorer cap­i­tal re­turns for gold will re­duce its de­sir­abil­ity as a store of wealth,” Vic­tor Thi­an­piriya, a com­mod­ity strate­gist at ANZ, said in a note.

The vast ma­jor­ity of an­a­lysts are not count­ing on the same ap­petite seen in 2013, and par­tic­i­pants in China gen­er­ally ac­knowl­edge that buy­ing this year was ex­cep­tional, and is un­likely to be re­peated next year, ac­cord­ing to UBS an­a­lyst

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