Chinese demand for gold set to slow
"The kind of frenzied buying in late April and early May won't be repeated," said Zhang Bingnan, secretary-general of the association. Some of the jewellery demand earmarked for festivals or weddings later this year may have been brought forward to April and May after prices fell, he said.
Gold has declined 15 per cent this year on concern the US Federal Reserve may rein in stimulus that helped bullion cap a 12-year bull run in 2012, and as some investors lost faith in the metal as a store of value. Gold takes centre stage in weddings in China in the form of jewellery and other gifts as a promise of a long and happy future together.
Chinese consumers rushed to buy jewellery, bars and coins as a 14 per cent drop in prices in two days in April was seen as a buying opportunity, Mr Zhang said.
Uncertainty about whether gold will fall further this year may deter some investors in China from buying in the second half, he added.
Gold slid by 31 per cent from a record in September 2011 through April 16, when it set a two-year low of $US1321.95 an ounce. It was trading Friday at $US1414.22.
Demand reached a record 294.3 tonnes in the three months to March, the gold council estimates. China's purchases in 2013 should be better than last year, when the country consumed 776.1 tonnes, little change from the previous year, according to the gold council.
About 6.6 million brides in China will receive gold at their weddings this year, and more than 80 per cent of jewellery made in China is 24 carat.
Investors cut 479.2 tonnes of the metal from exchange-traded products this year, while holdings in gold-backed ETPs have shrunk 18 per cent. This was the first reversal after expanding every year since the first product was listed in 2003.
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Chinese consumers rushed to buy jewellery, bars and coins after prices fell about 14% in two days in April, which many buyers saw as a buying opportunity, according to the article and comments from the China Gold Association.
The China Gold Association said demand may slow in the second half because some jewellery purchases earmarked for festivals or weddings were brought forward to April and May, and the late-April/early-May buying frenzy "won't be repeated."
Weddings and festivals drive large jewellery purchases in China — the article notes about 6.6 million brides will receive gold this year and more than 80% of Chinese-made jewellery is 24 carat — making these occasions a major source of gold demand.
The article reports gold had declined about 15% year-to-date, slid 31% from a September 2011 record to a two-year low of US$1,321.95 an ounce on April 16, and was trading at US$1,414.22 on the cited Friday.
According to the gold council cited in the article, demand reached a record 294.3 tonnes in the three months to March, and China consumed 776.1 tonnes in the previous year.
Investors cut 479.2 tonnes of gold from exchange-traded products this year, and holdings in gold-backed ETPs shrank about 18%, the first reversal after annual expansion since the first product listed in 2003.
The article links a roughly 15% decline this year to concerns that the US Federal Reserve may rein in stimulus that previously supported bullion, and to some investors losing faith in gold as a store of value.
The article suggests those spikes can be temporary: some demand tied to weddings and festivals was likely brought forward, and uncertainty about whether gold will fall further may deter buyers later in the year — meaning short-term frenzies don't necessarily signal a sustained trend.
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