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China Gold Demand Off to Hot Start

May 15, 2018 | The Gold Telegraph |

China Gold Demand Off to Hot Start

It looks to be another boom year for gold. Investors are anticipating a continued demand for the precious metal for the fifth year in a row, driven by geopolitical uncertainties and less-than-strong predictions for the U.S. economy and the U.S. dollar in 2019.

In times of economic turmoil, gold has always served as a hedge against the decreased value of stocks or currency. Faced with unusual market volatility, people around the globe are turning to the yellow metal as a haven and safe investment diversifier. The price of gold rose by 14 percent in 2017 and is likely to go higher.

While the U.S. dollar is expected to lose some value in 2018, the Euro and other currencies are showing a modest gain.

India has historically turned to gold not only for investment purposes but for jewelry. Its traditional wedding season is approaching, and gifts of gold jewelry are the norm, even among India’s more impoverished population.

During the first quarter of 2018, India saw a 12 percent decrease in demand for gold jewelry from the same period in 2017. Total gold purchased dropped from 99.2 tons to 87.7 tons. However, India’s demand for gold spiraled to a record high in the fourth quarter of 2017, up to 189.6 tons, so the drop was not unexpected. The rest of 2018 looks positive for Indian gold demand. A good monsoon season is predicted, which means healthy revenues for the farmers that make up one-third of India’s gold buyers for the upcoming wedding season. During drought years, such as 2014 and 2015, India’s gold consumption historically experiences a decline in gold demand, so this year’s weather forecast is new news.

China, the world’s major importer of gold, has been actively accumulating gold and is expected to continue doing so in the near future. During the first quarter of 2018, demand for gold jewelry totaled 187.7 tons, up 7 percent. Chinese jewelry sellers are working to attract a prosperous, more sophisticated, younger generation of customers by expanding and diversifying its selection. Following a slow retail year for jewelry in 2017, China is looking forward to strong sales in 2018. Withdrawals at the Shanghai Gold Exchange have been above average at 170 tons monthly. April’s demand for gold was up 28 percent from 2017.

Read the rest of the article at The Gold Telegraph: China Gold Demand Off to Hot Start | The Gold Telegraph