The jitters affecting the world’s second-biggest economy are starting to feed through into China’s gold market.
Source: Bloomberg: Published Jun 19, 2023 • 2 minute read
(Bloomberg) — The jitters affecting the world’s second-biggest economy are starting to feed through into China’s gold market.
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A surge in purchases by Chinese residents, driven by pent-up demand after three years of pandemic restrictions and optimism that the economy would quickly rebound, is starting to slow — yet another sign that the recovery is losing momentum.
China vies with India as the world’s biggest consumer of gold bars, coins and jewelry. Its central bank has also been a recent buyer, adding to its reserves for seven straight months after a three-year pause. Although most gold trades as a financial asset — notably as a haven for investors during risky times or as a hedge against inflation — China’s physical demand for the precious metal has helped underpin its ascent this year to over $2,000 an ounce.
The rapid expansion in retail sales of gold and silver jewelry looks to have topped out, rising 24% year-on-year in May to 26.6 billion yuan ($3.7 billion). That’s slower than the 44% and 37% growth recorded in the previous two months. The same period last year included the extended lockdown of Shanghai, when demand for goods and services cratered across the economy.