SHANGHAI: Gold consumption in the nation during Chinese Lunar New Year boomed, indicating rosy growth prospects, with promotions from retailers and relatively low prices enhancing the attractiveness of the precious metal for many Chinese consumers,according to the World Gold Council.

       During the Spring Festival break in the first week of February, gold jewellery consumption in Shanghai reached 1.1 billion yuan (US$171.8mil or RM718.66mil), up 12% year-on-year. As it is the Year of the Tiger, tiger-themed gold products and heritage gold jewellery were popular, the Shanghai Gold Jewellery Association said.

       In the first 15 days of the first month of the Chinese lunar calendar, consumption of gold in China went up by 12% year-on-year, the council said.

       Due to sporadic outbreaks of Covid-19 variants in different regions in the country, many Chinese travellers chose to cancel their travel plans and stay put during the Spring Festival holiday. Their freed-up travel budgets may have provided a further boost to gold jewellery purchases, the council said.

       “We remain relatively positive on the 2022 outlook for gold demand in China, despite the possibility of a slowdown in the country’s economic growth,” said Ray Jia, senior analyst on China for the World Gold Council.

       Compared with other markets, China’s gold jewellery market shows a higher price transparency, and young Chinese consumers have shown an increasing interest in gold jewellery, fuelled by their shifting tastes and mindset toward gold jewellery as an investment and a consumer product.

       In addition, there has been a greater push from commercial banks in bar and coin sales as their other retail gold business remains restricted, a dynamic that could impact gold demand in China this year, the council said.

       “Traditionally, there is a demand among consumers to buy gold products during the Spring Festival period. Besides, the popularity of the Beijing 2022 Winter Olympics has boosted the sales of some related gold products and jewellery,” said Li Yang, a gold industry analyst.

       China’s gold imports in 2021 totalled 818 tonnes, a 36% increase year-on-year on the back of a strong recovery in local gold consumption. It was close to the 2019 level, when there was no Covid-19 pandemic, according to data from the General Administration of Customs.

       After reaching an all-time high in December as investors took advantage of lower gold prices, collective holdings in Chinese gold ETFs (exchange-traded funds) fell nine tonnes to 66 tonnes, or US$4bil at the end of January.

       “Investors tend to cash their investments in before the Chinese Lunar New Year to avoid uncertainties in the global gold market during the Chinese holiday week,” Jia of the World Gold Council said. — China Daily/ANN