China still the largest gold consumer
Source: www.chinamining.org Citation: Global Times Date: May.21, 2012
China`s gold demand bucked the global trend by increasing over 9 percent year-on-year to hit a record high of 265.7 tons in the first quarter, driven by the country`s growing appetite for jewelry and gold investment, a World Gold Council (WGC) report said Thursday.
China has been the world`s largest gold consumer for the second quarter in a row, beating India`s consumption of 207.6 tons in the first quarter, which represented a 29 percent decline year-on-year.
"Further growth in gold consumption is expected in China, as consumers are still wary of high inflation rates, and the country`s restrictions on the property market continue," said the WGC report.
In the first quarter, China`s gold investment demand expanded to a record high of 100 tons, up 13 percent compared with the same period in 2011. Demand for gold jewelry reached 165 tons in the first quarter, 7 percent higher year-on-year.
China`s demand for gold jewelry currently accounts for over 30 percent of the world`s demand, making it the largest gold jewelry consumer for the third consecutive quarter.
"Even though China`s economic growth is slowing down, it is still very likely that China will become the largest source of world gold demand for the whole year," Albert Cheng, managing director of the WGC`s Far East division, told the Global Times Thursday.
In the first quarter, the world`s gold consumption dropped 5 percent year-on-year to 1,097 tons, mainly because gold prices have surged 22 percent from a year ago and because demand in India also fell significantly over the same period, said the WGC report.
Currently China and India account for some 50 percent of the world`s gold demand. But the Indian government has hiked jewelry taxes and raised gold import duties, said the WGC, which resulted in the sharp drop in first-quarter demand.
"Gold demand will surely be dampened when the economy slows down, as the demand for jewelry and gold for industrial use will shrink amid gloomy economic prospects," Song Jingyi, an investment consultant at Sinolink Securities, told the Global Times Thursday.
"China`s gold investment demand will depend on price expectations, and the performance of other sectors like the real estate sector and the stock market," said Cheng from the WGC.
Affected by the financial crisis in the eurozone, currently the world`s gold prices have dropped to a four-month low of some $1,540 per ounce.
But Zhang Bingnan, vice president of the China Gold Association, said that gold prices are expected to rise in the second half of this year.
"In the long run, gold will still be an important investment for people to avoid risks," Zhang told the Global Times.
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