Gold sales boom in China amid Spring Festival holiday
By Gao Ang
According to the China Gold Association, gold consumption rose by more than 80 percent year-on-year during this year's Spring Festival holiday. For many, it's seen as a safe investment amid global headwinds.
"I buy gold jewelry because it keeps its value. Whatever the price of gold, if there are styles that look good, we'll buy some," said a customer who preferred to remain anonymous.
Experts say the gold rush is partly due to the increasing uncertainties in the global economy and expectations of rising inflation. They say the demand for gold will continue for some time.
"So there is a decline in the dollar's status, and there are very few alternatives for dollars. And a lot of people are expecting the global inflation will rise, given the very aggressive monetary expansion in many of the economies," said Wang Dan, chief economist at Hang Seng Bank (China).
The price of the precious metal surged last year during the pandemic as investors sought a haven for funds, but it did not maintain its momentum. Last week, Bloomberg data suggested that gold's start to 2021 was the worst in 30 years. Spot gold rose to a one-week high of $1,815.3 an ounce on Tuesday amid inflation worries.
The global recovery after the COVID-19 pandemic is expected to bring more stability to the price of commodities, including gold.
"Because by then uncertainty will be lowered, and people don't have to store up something that doesn't have real value. We have to remember that gold is a precious metal, but it has very little practice use, except for jewelry and little bit for industrial sector," Wang said.
According to the China Gold Association, the actual consumption of gold nationwide was over 820 tonnes in 2020, down 18 percent year-on-year. Consumption of gold jewelry has also decreased by over 27 percent.
Yet this year's Spring Festival holiday has seen a turnaround in gold consumption, as the holiday usually marks a traditionally auspicious time to buy gold. Some Chinese also buy gold bars to keep its value, while others actively trade in gold ETFs.
Despite its shimmering appeal, gold reflects people's fear of uncertainty and hope for a more stable future.