Gold News

Gold Averages $2000 in Shanghai Trading for 1 Year as China's Younger Savers Buy

GOLD TRADING in China and London saw global bullion prices rise to 2-week highs on Wednesday as global stock markets slipped for a 3rd day running ahead of the release of quarterly earnings from high flying US tech-stock Nvidia plus interest-rate meeting notes from the Federal Reserve.
Touching $2030 per Troy ounce today, bullion for settlement in London – heart of the precious metal's trading and storage network – sank to 9-week lows last Wednesday at $1985 as strong US inflation data dented Fed rate-cut expectations and coincided with China's Lunar New Year holidays closing Shanghai's financial and commodities markets.
But excluding last week's Spring Festival shutdown in China's trading, the price of gold has now held above $2000 per Troy ounce for 6 weeks running in London, and in Shanghai – entry-point for all gold bullion into the precious metal's No.1 consumer market – it has now averaged the equivalent of that  $2000 level for Chinese traders across the last 12 months.
China's household gold demand grew in 2023 by weight even as bullion prices traded up to all-time records, snapping the country's more typical pattern of buying the dips and fading new highs.
Chart of gold bullion in London and Shanghai, US Dollar equivalent per Troy ounce. Source: BullionVault
With China's stock market, real estate and cash interest rates all suffering in recent years, "It's hard for young people to save money," the AFP news agency today quotes a 30-year old jewelry buyer.
"Buying gold means the money is still with you, in a different way."
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"The last few years have seen attitudes change dramatically," AFP also quotes Nikos Kavalis of specialist bullion-market consultancy Metals Focus, explaining that younger savers "are becoming a huge driving force" in China's world-leading gold demand.
"Pure gold jewellery continues to serve as a safe haven for Chinese consumers amid recent economic conditions," said a recent report from leading jewelry manufacturer and retailer Chow Tai Fook (HKG: 1929).
With the People's Bank cutting mortgage interest rates at the weekend but disappointing hopes for more stimulus yet again, Wednesday saw China's stock market gain 1.4% after the Beijing authorities banned large institutional investors from selling equities into the open or the close of each trading day.
The CSI300 index has now risen on all but 1 of February's 9 trading days so far, reaching a 13-week high and rebounding 8.7% from the 5-year low hit at the start of this month.
The Yuan also rallied on the FX market, helping the US Dollar slip to 1-week lows ahead of Wednesday's release of Fed meeting minutes from its February decision to hold US interest rates unchanged at 2-decade highs.
That put the Dollar down 0.9% from last Tuesday's 3-month high against the rest of the world's major currencies.
"The Dollar Index has come down a bit, so it's supporting gold prices and we are experiencing some safe-haven buying as well due to rising tensions in the Middle East," Reuters quotes an analyst in gold's No.2 consumer market, India.
With Russia today calling for the establishment of a Palestinian state at the International Court of Justice's hearing over Israel's invasion of Gaza following Hamas' 7th October atrocities, Houthi rebels in Yemen – having forced the crew of a British ship carrying dangerous fertiliser to evacuate at the weekend – yesterday claimed to have targeted an Israeli cargo ship as well as US war ships in the Red Sea.
But rather than net inflows, this week has so far seen continued liquidation of the 2 largest gold-backed ETF trust funds, with the GLD and IAU now down to their smallest sizes since August 2019 and March 2020 respectively.
Market expectations now say the Fed won't cut Dollar interest rates until June, rather than March as previously forecast.
Up 230% from this time last year, stock in Nvidia (Nasdaq: NVDA) yesterday lost $78 billion of market value ahead of today's earnings report. 

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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