The Chinese gold jewelry market has experienced a rebound from July to September, according to the World Gold Council (WGC). This growth occurred despite high gold prices. The council expects further increases in demand during the fourth quarter.
In the third quarter, gold jewelry demand in China rose by 19% compared to the previous quarter. However, year-over-year consumption dropped by 34%, which is a 36% decrease from the ten-year average. Over the first nine months of this year, total gold jewelry demand reached 373 metric tons, down 23% from the same period last year.
During the third quarter, the Chinese gold exchange-traded fund (ETF) market saw an outflow of about 520 million yuan ($73 million), equivalent to 1 metric ton of gold. Despite this, total holdings and assets in gold ETFs rose significantly by 49% and 91%, respectively, in the first three quarters of 2024. The cumulative demand for gold ETFs has reached a record high of 17 billion yuan ($2.3 billion).
Demand for gold bars and coins also decreased, totaling 62 tons in the third quarter. This marked a 22% decline from the previous quarter and a 24% decrease compared to last year. Factors contributing to this decline included a higher sales baseline from last year, the strengthening of the Chinese renminbi, and stabilized high domestic gold prices.
Despite the recent drop in demand for bars and coins, the overall demand has been strong this year, totaling 253 tons, the highest level since 2013.
Wang Lixin, regional CEO of WGC China, highlighted that the fourth quarter typically sees increased demand for wedding jewelry. He noted that the upcoming Spring Festival is driving retailers to restock, which should support gold jewelry demand.
Recent government economic stimulus measures are also expected to boost gold jewelry consumption. However, uncertainties remain about the effects of high gold prices and the effectiveness of these stimulus policies on consumer confidence. Ongoing industry consolidation and fewer retail outlets may further reduce physical gold demand.
Regarding retail investment in gold, Wang indicated that possible interest rate cuts could support demand in the fourth quarter. However, as the government implements more stimulus measures, gold investments may face competition from other domestic assets. The direction of gold prices will be crucial in shaping future investment demand.
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