In 2013, gold price plunged in April, to the lowest level at US$1,187.8 per ounce in December, resulting in a drop of 30 percent over the past 12 months. The slump in gold price triggered a buying craze in China and created an unprecedentedly huge consumer demand for the metal. A report released by the World Gold Council (WGC) showed that China’s gold demand topped 1,000 tonnes for the first time in 2013, overtaking India to become the world’s largest gold consumption market.
It was, however, reported that the buying surge had over-stimulated people’s future consumption, which may not further drive up the Chinese gold demand in 2014. In addition, the gold price in the first quarter of 2014 rebounded to around US$1,300 per ounce as of the date of writing. Buying craze by ‘bargain-hunting Chinese mothers’ therefore seems to be over. A report released by the Australia & New Zealand Banking Group Limited (ANZ) stated the import of gold in China would gradually decrease, according to Sino Corpaoration, Victor Thianpiriya, commodity strategist at ANZ wrote in the report: “The fall in prices below US$1,200 per ounce in June 2013 triggered a front-loading of consumption on physical gold, somewhat cannibalizing future demand in the meantime.”
Demand for gold may decline by 17 percent in the first quarter over the year from 300 tonnes to 250 tonnes, said by the China Gold Association (CGA) in an early Bloomberg’s interview. Zhang Yongtao, vice chairman of CGA expressed: “The drop in sales may be brief. I think demand will start climbing again once the festive and marriage season begin later this year.”
Hong Kong Jewellery Co Limited mainly sells gold, platinum, karat-gold and diamond jewellery in its over 30 brand boutiques in China. In an exclusive interview with Hong Kong Jewellery, deputy general manager Zhang Tuoji said that 2014’s gold price gradually bounces back and the surge in gold purchases would be over during this period. Some end-consumers have shifted their focuses to diamond and gemstone jewellery. He continued: “We are not sure if the gold price will plunge again. But we see optimism towards gold and truly believe that the demand for gold jewellery will be getting better.” The company discloses that its export of gold jewellery has doubled after the remarkable expansion of its sales channels and product scale.
Shenzhen-based Yunjin Jewellery Company Limited specializes in designing, researching and manufacturing gold jewellery. General manager Zhong Shao told Hong Kong Jewellery that the company’s gold sales are steadily growing. He expressed: “Gold price rose again in the first quarter of 2014. When compared with last year, the industry’s sales still see a decline. However, a positive growth is recorded over the same period in 2012. Consumers have deeper understanding on gold, resulting in more rational purchases. It is believed that the buying craze would vanish. Instead, the gold market will be steadily growing and soon return to a positive growth rate in 2012.” He also believes that China would still remain the world’s largest gold consumption market where demand for gold will not see a big drop in the future.
China’s gold market: progress and prospects, a WGC’s recent major report, suggests that 2014’s gold market is likely to see consolidation. However, the succeeding years are likely to see sustained growth. It also estimates demand for gold jewellery would continue to grow and reach 780 tonnes by 2017.
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