Metals Focus: 'Healthy' Outlook For Chinese Gold Demand
Editor's Note: Gold and silver has been, at best, a frustrating trade. Exclusive to Kitco News, expert trader, Todd "Bubba" Horwitz, chief market strategist and founder of 'Bubba Trading provides a strategy investors can use in a range-bound gold price environment. Sign up before March 10 for the Kitco News Weekly Rundown newsletter to receive Horwitz's exclusive report and trading strategy.
(Kitco News) - The outlook for gold demand in China,which has become the largest gold-buying nation in the world, is “healthy,”says Metals Focus.
Analysts look for growth in both jewelrybuying and purchases of physical metal for investment purposes.
The country accounted for 646.9 tonnes ofgold-jewelry demand in 2017, an annual gain of 3% and outpacing No. 2 goldbuyer India at 562.7 tonnes, according to the World Gold Council’s quarterlydemand trends report, for which Metals Focus compiles the data. Chinesepurchases of gold bars and coins rose 8% in 2017 to 306.4 tonnes, also the mostin the world ahead of India’s 164.2.
“Early feedback from our contactsfollowing the Lunar New Year holidays in China paints a positive picture forlocal jewelry consumption,” the consultancy said in a report released Tuesday.“This lends yet more confidence to our view that the jewelry market in thecountry bottomed out in 2016 and is undergoing a modest recovery. This stancealso mirrors an optimistic general market consensus on the sector.”
Retailers have been replenishinginventories after the holiday-buying season, Metals Focus said.
“The main driver behind this promisingturnaround has been the improving Chinese economy and its positive impact onconsumer sentiment,” Metals Focus said. “Importantly, the recovery of the past12 months is seen as sustainable, in the sense that demand is now stimulated bydesigns and gifting occasions, rather than the bargain hunting that fueled the2013 spike.”
Meanwhile, gold-bar sales in 2017 postedtheir third consecutive annual increase and are expected to rise another 6% forthe remainder of this year, the consultancy reported.
“There was a growing interest for goldfrom sophisticated, often high-net worth investors looking at gold as aportfolio diversifier,” Metals Focus said. “Demand from this group has tendedto spike either after a price correction or during periods of rising concernstowards Chinese currency weakness.
“Another important factor behind thestrength of investment demand is the lack of alternative investment assets; theChinese government extended property-purchase restrictions to more citiesthroughout 2017, while the stock market has still not entered a bull market.”
By Allen SykoraFor Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.