Nation's gold consumption soars in first half

China's gold jewelry consumption increased 62 percent year-on-year to 146.9 metric tons in the second quarter, bringing first half gold jewelry consumption volume to a level not seen since 2015, a report by the World Gold Council (WGC) said.

The consumption volume of gold jewelry in the second quarter was 8 percent higher than that in the same period of 2019, and 5 percent higher than the average level of the quarter in years between 2010-19, the report said.

In the first half, China's gold jewelry consumption reached 338 tons, a level not seen since 2015, surging 122 percent year-on-year. The surge is also likely to continue in the second half of this year, according to the report.

Experts said the surge was buoyed by China's recovering economy, domestic measures to boost consumption and the rise in per capita disposable income, which, according to the National Bureau of Statistics, climbed to 17,642 yuan ($2,730.39) in the first half, up 12.6 percent year-on-year in nominal terms.

Wang Lixin, CEO of WGC's China branch, said the significant demand growth of gold jewelry in China in the second quarter was attributable to the robust economic recovery and the nation's effective measures to contain COVID-19.

Wang added that consumers are showing increasing interests in gold jewelry with more products adopting innovative designs and adding traditional Chinese styles. Clearer pricing is another reason attracting more consumers, Wang said.

Gufajin－gold forged in ancient Chinese style－is a variety of gold products gaining increasing popularity among consumers, especially high-end and young customers, the WGC report said. Such products adopt gold-forging techniques that are listed as national cultural heritage, and have a matte effect on gold surface, which many consumers consider classic.

In recent years, gufajin products started to create Chinese chic by integrating traditional Chinese style with fashion elements, which make them attractive to young consumers, the WGC report said.

Wang said China's economic recovery also drove up investment demand for gold bars and gold coins.

In the second quarter, China's total demand for gold bars and gold coins was 57.3 tons, a year-on-year increase of 41 percent and 16 percent compared with the same period of last year and 2019, respectively, bringing China's total sales of gold bars and gold coins to 143.3 tons in the first half.

The WGC report explained that investor demand for gold bars and coins in China is largely affected by gold prices and the economy. Since the second half of 2018, the price of gold has generally shown an upward trend, but there has been an adjustment in the first half, which is 7 percent lower than that of the second half of last year. Therefore, some investors chose to buy on dips in order to obtain long-term gains from rising gold prices.

"The fluctuation of gold prices and the economic recovery drove up investment demand in gold bars and coins. Many Chinese consumers take gold as a tool for hedging financial risks under considerations of inflation and increasing disposable income," Wang said.