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China's Household Gold Buying Jumps Even as Yuan Price Hits Record

Gold's No.1 consumers snap a decade of price-sensitive investing...
CHINESE HOUSEHOLDS, the world's heaviest buyers of physical gold, last year grew their purchases of gold even as the precious metal rose in price to new all-time records in terms of the Yuan as well as all other major currencies including the US Dollar.
That was the first such growth on a rising gold price since 2017 for China's private-sector gold buying, and it contrasts with the past decade of 'price sensitive' action more akin to the behavior of households in India, now the world's No.2 gold consumer nation.
Starting with a strong Chinese New Year for gold demand, China's jewelry purchases rose 8.0% in 2023 according to new data from industry body the China Gold Association today, while demand for gold coins and small bars jumped 15.7% by weight.
Together that took the total quantity of bullion in gold products bought by Chinese households 10.1% higher from 2022 to just over 1,006 tonnes, almost 82 tonnes above the previous 5-year average on the CGA data and one-third greater from the Association's figure for 2020, when the Covid pandemic and lockdowns crushed the country's retail sales.
Chart of China's household gold demand vs. Shanghai wholesale gold price. Source: BullionVault
With China's stock market sinking by more than 20% in 2023 to hit 5-year lows on the CSI 300 index, last year's growth in its household demand for gold took consumer spending on bullion to a new all-time high, rising 30.5% in terms of the Chinese Yuan and 23.8% in terms of the US Dollar to more than $56 billion.
That equates to 0.32% of China's total economic output, the highest proportion of GDP spent on gold bullion by Chinese households since 2016 but still only half the record level of 2013, when a crash in global gold prices spurred a record jump in the volume of gold jewelry, coins and small bars bought by Chinese consumers.
The People's Bank of China also reported that it chose to buy a record annual quantity of gold in 2023, adding 225 tonnes to the central bank's foreign-exchange reserves – the strongest ever growth outside of the multi-year totals for PBoC gold buying reported in 2009 and then in 2015.
"Driven by a series of policies to boost retail spending," says today's CGA release, "China's consumer markets continue to recover" from the Covid Crash of 2020, with gold and silver jewelry becoming the fastest-growing category among all retail sectors last year.
China's 2023 GDP data from the National Bureau of Statistics last week said that retail sales of gold, silver and jewelry rose 13.3% across the year, topping growth in sports and recreational goods (up 11.2%) and communications equipment (up 7.0%). 
"The online performance of gold jewelry sales was outstanding in December," says news-site Securities Times, quoting analysis from brokerage Wanlian that says Alibaba (HKG: 9988) last month saw a year-on-year increase of 18%, with 63% growth at No.2 online retailer (HKG: 9618) and 37% on platform SuNing (SHE: 002024).
More notably still, gold investment products are seeing "high attention" the CGA adds today, highlighting "rapid growth in the consumption of gold bars and gold coins with relatively low premiums" over the wholesale bullion market price.
China's private gold investing demand leapt last summer, seizing on a small retreat in global prices as other investment options in the world's 2nd largest economy – from real estate to equities and cash in the bank – continued to underperform amid a slowdown in GDP growth.
Wholesale bullion traded in Shanghai has already set a new all-time record Chinese gold price in 2024, rising to touch ¥483 per gram last week as the Yuan fell alongside China's stock market.

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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