China’s Growing Middle Class to Sustain Demand for GoldBloomberg News
China’s rising middle class will sustain demand for bullion after the nation overtook India as the world’s largest gold buyer in 2013, according to the World Gold Council.
Chinese consumers bought a record 1,066 metric tons of gold last year, as the steepest price drop since 1981 spurred a 32 percent jump in bars, coins and jewelry consumption, the council said. The country’s increased purchases helped limit the decline in gold prices as investors globally sold a record 869.1 tons through exchange-traded products backed by bullion.
“China’s gold consumption this year will probably be sustained above 1,000 tons as long as the economy here will grow at 7 percent,” Albert Cheng, the council’s managing director for the Far East said in an interview by telephone from Hong Kong. Cheng pointed to wealth accumulation among China’s growing middle class.
The metal posted its best start to a year since 1983 as futures rose 9.7 percent in 2014 through Feb. 14. Holdings in exchange-traded products backed by bullion increased by 3.2 metric tons last week, the most since December 2012.
The producer-funded council’s data today is consistent with the China Gold Association’s estimate earlier this month that Chinese gold usage surged 41 percent to 1,176 tons in 2013 from the year before.
Gold for immediate delivery retreated 0.9 percent to $1,317.35 an ounce at 1:54 p.m. Beijing time. The bullion of 99.99 purity traded in Shanghai fell 0.7 percent at 258.10 yuan a gram ($1,323.32 an ounce).
— With assistance by Feiwen Rong