China’s Continued Dominance in Gold Consumption
Even as prices set new all-time highs, the latest government and industry data showed that China continued to consume the lion’s share of global gold production.
Increased Gold Consumption in China
The China Gold Association (CGA) announced on Friday that the country’s gold consumption was 5.94% higher in the first quarter of 2024 than during the same period in 2023, which they attributed to surging demand among the citizenry for safe haven assets.
Chinese buyers bought 308.91 metric tons of the precious metal in the first three months of the year. The CGA said gold bars and coins represented 34% of the total, as they saw an increase of 26.77% percent to 106.32 tons in Q1.
Coupled with the attractiveness of gold prices to Chinese investors, the increased gold consumption is reflective of the ongoing trend of using gold as a safe haven asset.
Impact of High Gold Prices
While sky-high gold prices made the yellow metal more attractive to Chinese investors, they also made it too expensive for many regular shoppers. Purchases of gold jewelry fell 3% during the quarter to 183.92 tons, or 59.5% of total consumption. The CGA said rising gold prices increased operational risks for precious metal processing and sales companies.
The shift in consumer behavior due to high gold prices highlights the delicate balance between investment appeal and affordability in the gold market.
Domestic Gold Production and Imports
China’s domestic gold production rose 1.16% to 85.96 tons in Q1, while gold production from imported raw materials increased by 78% to 53.23 tons, contributing to a total gold production of 139.18 tons in the country, a 21.16% uptick from the first quarter of the previous year.
With a combination of increased domestic production and higher imports, China’s position as a major player in the global gold market is further solidified.
Net Gold Imports via Hong Kong
The Hong Kong Census and Statistics Department announced that China’s March net gold imports via Hong Kong increased by 40% from the previous month.
The significant rise in net gold imports showcases continued strong demand for gold in China, further emphasizing its position as a key player in the global gold market.
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