Wealthier consumers to hike China’s gold demand 25% by 2017
london — Gold demand in China, which overtook India as the largest user last year, will rise about 25 per cent in the next four years as an increasing population gets wealthier, according to the World Gold Council.
Consumer demand will expand to at least 1,350 metric tonnes by 2017, the London-based council said in a report on Tuesday. Growth may be limited this year after 2013’s price decline spurred consumers to do more buying last year, it said.
China accounted for about 28 per cent of global usage last year, the council estimated in February. Buying accelerated last year as prices slumped 28 per cent, the most since 1981, and the nation became the top buyer in place of India, where import restrictions curbed demand. China’s economy will expand 7.4 per cent this year, economists surveyed by Bloomberg estimate. While that’s set to be the least since 1990, it’s still more than double expected growth in the US.
“Whilst China faces important challenges as it seeks to sustain economic growth and liberalise its financial system, growth in personal incomes and the public’s pool of savings should support a medium-term increase in the demand for gold, in both jewelry and investment,” Albert Cheng, Far East managing director at the council, said in a statement accompanying the report.
Growing population
China has 170 cities that have at least one million inhabitants each, and the middle class will expand more than 60 per cent to 500 million in the next six years, according to the report. About $7.5 trillion is held in bank accounts and household allocations to gold remain “small” at about $300 billion, it said.
The nation’s consumer gold demand increased 32 per cent to 1,065.8 tonnes last year, the producer-funded organisation said in February. Jewellery purchases of almost 669 tonnes accounted for 30 per cent of the global total and will reach 780 tonnes by 2017, according to Tuesday’s report.
Annual bar and coin demand could near 500 tonnes by 2017, 25 per cent above last year’s record. —