China marches to its own beat.
This year, European and US investors have fled gold positions in exchange-traded funds at record levels due to weak gold demand. Third quarter gold demand declined by 21 percent to 868.5 metric tons. Yet, China’s demand for gold jewelry soared by 29 percent in the quarter, according to the World Gold Council.
China surpassed India as the world’s top gold consumer in the third quarter, the WGC reported. India’s gold demand was hurt by government regulations.
“A number of factors contributed to China’s growing appetite for gold jewelry, including lower gold prices, which made it more affordable for consumers; improving economic conditions; and strong brand promotion within the jewelry sector,”Cao Xiaorui, director of jewelry for the WGC, tells China Daily.
“In Shenzhen, China’s largest gold jewelry exhibition and wholesale hub, about 200 new gold jewelry display centers opened in the third quarter, showing market players’ strong confidence in the sector,” Cao said.
Cao expects the growing middle class in China will place a greater value on the style and design of gold jewelry than on the material value of gold.
Some experts believe gold remains in demand. “Consistent with the first two quarters of 2013, the global gold market remains resilient, underpinned by a continuing shift in demand from West to East, strong demand in consumer categories and solid central bank and technology sectors,” said Marcus Grubb, managing director of investment at the WGC.
image credit: jaime london boy