Rising gold prices are driving up gold consumption.
China's gold consumption in 2023 reached 1089.69 tons, an 8.78% year-on-year increase. Rising gold prices fuel consumption surge Data released by the China Gold Association shows that China's gold consumption in 2023 reached 1089.69 tons, an increase of 8.78% compared to the same period in 2022. This includes 706.48 tons of gold jewelry (a 7.97% year-on-year increase) and 299.60 tons of gold bars and coins (a 15.70% year-on-year increase). A relevant official from the China Gold Association stated that "under the impetus of a series of policies to boost consumption, the national consumer market has continued to recover and improve, with gold and silver jewelry becoming the fastest-growing category among all retail goods throughout the year." The official also noted that gold jewelry processing and retail companies are constantly innovating in gold jewelry design, with small-weight, new-style gold jewelry being particularly popular among consumers, driving increased consumption. The high level of attention to physical gold investment has led to faster growth in consumption of gold bars and coins, which have relatively low premiums. Industry insiders believe that the booming gold consumption market is driven by multiple factors, with the sustained rise in gold prices being a significant one. At the end of December 2023, the year-end price of London spot gold was $2062.40 per ounce, a 12.39% increase compared to the opening price of $1835.05 per ounce at the beginning of 2023. The closing price of Au9999 gold on the Shanghai Gold Exchange at the end of December was 479.59 yuan/gram, a 16.69% increase compared to the opening price at the beginning of 2023. The full-year weighted average price was 449.05 yuan/gram, a 14.97% increase year-on-year. Zhou Maohua, a macro researcher at the Financial Markets Department of China Guangfa Bank, stated that in 2023, international gold prices repeatedly hit new highs, and some investors, driven by a "buy high, don't buy low" mentality, increased their consumption. At the same time, against the backdrop of global financial market fluctuations, gold has outperformed other major RMB assets, attracting investor attention. Wu Dan, a researcher at the China Bank Research Institute, noted that "China is the world's largest gold consumer, and residents are keen on buying gold jewelry, gold coins, and investment gold bars to meet their needs for appreciation, collection, and value preservation." The significant increase in China's gold consumption in 2023 is attributed to three factors: increased consumer spending and demand for gold; enhanced design and promotion of gold jewelry, leading to increased consumer attention; and the global gold price being in an upward cycle due to domestic and international uncertainties, with last year being a significant year for global gold consumption, leading some residents to increase their gold hoarding in line with market trends. Jia Shuchang, senior analyst at the World Gold Council, stated that in 2023, the gold jewelry industry continuously iterated its designs and launched new products, adapting to the changing tastes of consumers and stimulating demand. It is worth mentioning that many investors also participated in investment through the purchase of gold ETFs (exchange-traded funds). In 2023, the holdings of domestic gold ETFs showed a steady growth trend. By the end of the year, domestic gold ETFs held approximately 61.47 tons, an increase of 10.04 tons compared to the same period in 2022, representing a year-on-year growth of 19.53%. Furthermore, the "gold rush" among central banks in many countries in 2023 also contributed to gold demand. The People's Bank of China increased its gold holdings by 224.88 tons last year, marking 14 consecutive months of gold purchases from November 2022 to December 2023. Zhou Maohua predicts that domestic gold demand will remain steadily strong this year. This is due to China's continued economic recovery, which will drive expansion in gold consumption demand, and the ongoing geopolitical conflicts globally and the gradual transition of developed economies to interest rate cuts, which will provide some support to gold prices. Wu Dan also believes that the hot market for domestic gold sales is expected to continue this year, with residents maintaining high enthusiasm for consuming physical gold. "In 2024, there will still be uncertainties in the global political and economic situation, and risk aversion in domestic and international markets will remain high. The market expects that the US dollar index will not be able to maintain its strong performance from last year, which will further push up gold prices and stimulate residents' demand for gold reserves."
Time:
2024-02-04 10:10
In 2023, China's gold consumption reached 1089.69 tons, an 8.78% year-on-year increase.
Rising gold prices fueled increased gold consumption.
Data recently released by the China Gold Association shows that in 2023, national gold consumption reached 1089.69 tons, an increase of 8.78% compared to the same period in 2022. This includes 706.48 tons of gold jewelry (a 7.97% year-on-year increase) and 299.60 tons of gold bars and coins (a 15.70% year-on-year increase).
“Driven by a series of policies to boost consumption, the national consumer market has continued to recover and rebound, with gold and silver jewelry becoming the fastest-growing retail category of all commodities throughout the year.” A relevant official from the China Gold Association explained that gold jewelry processing and retail companies are constantly innovating in gold jewelry design, with small-weight, new-style gold jewelry being particularly popular with consumers, boosting gold jewelry consumption. The high level of attention to physical gold investment has led to faster growth in the consumption of gold bars and coins, which have relatively low premiums.
Industry insiders believe that the booming gold consumption market is driven by multiple factors, with the sustained rise in gold prices being a major reason. At the end of December 2023, the year-end price of London spot gold was $2062.40 per ounce, a 12.39% increase from the opening price of $1835.05 per ounce at the beginning of 2023. The closing price of Au9999 gold on the Shanghai Gold Exchange at the end of December was 479.59 yuan/gram, a 16.69% increase from the opening price at the beginning of 2023, with a full-year weighted average price of 449.05 yuan/gram, a 14.97% increase year-on-year.
Zhou Maohua, macro researcher at the Financial Markets Department of China Guangfa Bank, said that in 2023, international gold prices repeatedly hit new highs, and some investors, driven by a "buy high, don't buy low" mentality, increased their consumption. At the same time, against the backdrop of fluctuations in the global financial market, gold has outperformed other major renminbi assets, attracting investor attention.
“China is the world's largest gold consumer, and residents are keen to buy gold jewelry, gold coins, and investment gold bars to meet their needs for appreciation, collection, and value preservation.” Wu Dan, a researcher at the Bank of China Research Institute, said that the significant growth in China's gold consumption in 2023 is due to several factors: firstly, increased consumer spending and demand for gold; secondly, sales channels have strengthened the design of gold jewelry and increased publicity, further increasing consumer attention; and thirdly, affected by domestic and international uncertainties, global gold prices are in an upward cycle; and fourthly, last year was a big year for global gold consumption, and some residents increased their gold hoarding demand in line with market trends.
Jia Shuchang, senior analyst at the World Gold Council, said that in 2023, the gold jewelry industry's designs have been constantly iterated and products continuously updated, adapting to the ever-changing tastes of consumers, which helps stimulate demand.
It is worth mentioning that many investors also participate in investment through the purchase of gold ETFs (exchange-traded funds). In 2023, the holdings of domestic gold ETFs showed a steady growth trend. By the end of the year, domestic gold ETFs held approximately 61.47 tons, an increase of 10.04 tons compared to the same period in 2022, representing a year-on-year growth of 19.53%.
In addition, the "gold rush" by central banks in many countries around the world in 2023 also boosted gold demand to some extent. The People's Bank of China increased its gold holdings by a total of 224.88 tons last year. From November 2022 to December 2023, the People's Bank of China has increased its gold holdings for 14 consecutive months.
Zhou Maohua said that domestic gold demand is expected to maintain steady growth this year. On the one hand, China's economy continues to recover and improve, which will drive the expansion of gold consumption demand. On the other hand, the current global geopolitical conflicts are still fermenting, and developed economies are gradually transitioning to interest rate cuts, which will also provide some support to gold prices.
Wu Dan also believes that domestic gold sales are expected to maintain a hot trend this year, and residents will remain enthusiastic about consuming physical gold. “The global political and economic situation in 2024 remains uncertain, domestic and international market risk aversion is high, and the market expects the US dollar index to be unable to continue its strong performance last year. These factors will further push up gold prices and stimulate residents' demand for gold reserves.”
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