Gold shines as wealth boosts jew­elry

China Daily - - BUSINESS MARKETS - By ZHENG XIN zhengxin@chi­nadaily.com.cn

Ris­ing af­flu­ence is con­tin­u­ing to stoke jew­elry de­mand, re­sult­ing in ris­ing con­sump­tion of gold in China, sec­ondquar­ter in­dus­try data con­firmed.

Ac­cord­ing to David Har­quail, chair­man of the World Gold Coun­cil, ro­bust gold con­sump­tion in China will likely grow fur­ther as long as the coun­try’s wealth keeps ex­pand­ing.

Har­quail es­ti­mated that Chi­nese peo­ple will buy about 30 per­cent of the gold sold glob­ally, mostly in the form of jew­elry.

Agreed Song Xin, pres­i­dent of the China Gold As­so­ci­a­tion. He at­trib­uted the con­tin­u­ous in­crease in gold jew­elry con­sump­tion to grow­ing de­mand among younger Chi­nese con­sumers for gold ear­rings, bracelets and other kinds of jew­elry.

Glob­ally, gold de­mand dur­ing the first half of 2018 dropped 6 per­cent year-onyear to 1,959.90 met­ric tons, the low­est level since 2009, the WGC said in its lat­est re­port on de­mand trends.

In the sec­ond quar­ter alone, de­mand was down 4 per­cent year-on-year to 964.3 tons. Pur­chases for in­vest­ment pur­pose fell 9 per­cent, the WGC said.

But, dur­ing the same pe­riod, the yel­low metal’s con­sump­tion in China rose 7 per­cent year-on-year to reach 332 tons, a three-year record.

An­a­lysts said con­sump­tion is ex­pected to con­tinue to rise on the back of strong de­mand and growth in high-end sec­tors like jew­elry.

China has for long been the dom­i­nant player in the global gold in­dus­try. “The in­dus­try is mov­ing to pro­duce more re­tail prod­ucts to meet cus­tomer needs,” said Zhu Yi, se­nior an­a­lyst of met­als and min­ing at Bloomberg In­tel­li­gence.

“The rise in sec­ond-quar­ter de­mand was mostly driven by con­sump­tion of jew­elry, gold bars, coins, and the growth rate is faster than that in the first quar­ter be­cause of in­vestor con­cerns amid (China-US) trade ten­sions.”

The global slump in gold prices since April has fur­ther stim­u­lated the al­ready strong de­mand in China, said Zhu. “The price drop due to the China-US trade ten­sions, the grow­ing strength of the US dol­lar, and the de­pre­ci­a­tion of the RMB will fur­ther drive gold de­mand in the sec­ond half.”

In­ter­na­tional gold prices, which were at $1,302.70 per ounce at the be­gin­ning of this year, dropped to­ward the end of April and closed the first half at $1,253.20 per ounce.

How­ever, do­mes­tic gold con­sump­tion dur­ing the first half reached 541.22 tons, a slight in­crease com­pared with the same pe­riod last year, CGA data showed.

The CGA said gold con­sump­tion in China reached 1,089.07 tons in 2017, up 9.41 per­cent, with de­mand for gold jew­elry, gold bars and in­dus­trial-use yel­low metal surg­ing.

The jew­elry seg­ment’s con­sump­tion was up by 6.37 per­cent year-on-year to 351.84 tons, it said.

The rise in sec­ondquar­ter de­mand was mostly driven by con­sump­tion of jew­elry, gold bars, coins ...”

Zhu Yi, se­nior an­a­lyst of met­als and min­ing at Bloomberg In­tel­li­gence

WANG JIANZHONG / FOR CHINA DAILY

Con­sumers browse gold or­na­ments at a jew­elry store in Suzhou, Jiangsu prov­ince.

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