China’s Gold Demand Seen Rising by at Least Economic Growth
Consumer gold demand in China, last year’s second-biggest user after India, may increase by at least the same pace as the country’s economic growth, according to the World Gold Council.
Economic expansion may slow to 7.4 percent next year and 7.2 percent in 2015, from 7.6 percent this year, according to economist estimates compiled by Bloomberg. Chinese gold demand growth may at least match those increases and could rise further as a rising population has more disposable income, Albert Cheng, Far East managing director at the council, said in an interview at a London Bullion Market Association conference in Rome.
China’s consumption may reach 1,000 metric tons this year as it vies to match India’s demand, the council said in August. Gold rose 13 percent from a 34-month low in June as lower prices boosted jewelry, coin and bar buying in Asia. Economic growth in Asia that’s bigger than in western nations and rising populations aided demand that led Australia & New Zealand Banking Group Ltd., Deutsche Bank AG and UBS AG to open vaults in the region this year.
“The number of cities and rising population are sources of future gold jewelry consumption in China,” Cheng said. “There’s a rising middle class. There are not many alternative investments. Gold is a good alternative to consider for protecting wealth.”
Gold for immediate delivery traded at $1,331.41 an ounce by 11:54 a.m. in London. It’s set for a 21 percent drop in 2013 after climbing the past 12 years. Prices rebounded from $1,180.50 in June. They reached a record $1,921.15 in September 2011.
Global sales of bullion bars and coins surged 78 percent to an all-time high in the second quarter as demand more than doubled in India and China amid lower prices, according to the producer-funded council. China’s population will reach 1.43 billion in 2020, 5.4 percent more than in 2010, according to United Nations estimates.
“The Chinese consumer was on the sideline, waiting for gold to pull back,” Cheng said. “Gold has an intrinsic value. They thought it’s a good time to get in.”
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