With the highly saving Chinese buyers considering gold as a secure asset, the demand for gold in the upcoming decade is expected to double.
Over the decade, demand for gold in China could double up from the existing levels, estimated Industry group The World Gold Council, as per the news published by
Market Watch.
In 2009, gold demand in China touched 423 Metric Tons (466 Short Tons), and the contribution from domestic mine supply was just 314 Metric Tons (346 Short Tons).
Of the total demand for gold in China, nearly 80% demand is for jewelry. When, amid global economic meltdown and soaring gold prices in 2009, consumption in other countries fell, the only country which registered an increase in the demand for jewelry was China.
For the coming decade, gold demand in China is anticipated to continue accelerating as regardless of higher prices of gold, consumers’ appetite would continue to grow. Besides, rising levels of income and upcoming inflationary anticipations are expected to back investment box for gold as an asset, particularly given that the highly saving Chinese consumers are considering gold to secure wealth.
Further, PBoC, the People’s Bank of China, is playing a critical role to support gold demand in China. Presently, of its overall reserves worth US$ 2.4 Trillion (computed by international standards), bank’s gold holdings are at 1.6%. WGC estimates that if the Bank decides to balance its books again as per its current top investment in gold as a share of accumulations of 2.2% in the last quarter of 2002, it could make up an overall additional demand of 400 Tonnes at existing gold prices.
Industry experts said that the Chinese gold market holds a considerable untapped potential for growth as the rising gold consumption was from all the sectors, encompassing private investment, jewellery sales, plus the demand from central and industrial bank. However, the level of consumption in China is still quite low. Compared to the countries where similar gold culture exists, per capita consumption of Chinese In jewelry at 0.26 gm is one of the lowest.
According to a Research Analyst at
RNCOS, “Domestic gold supply would have failed to keep pace if the demand for gold were to continue to increase in the long term. Hence, due to the rising demand, both domestic and foreign would greatly benefit from the budding market.”
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