The buying demand for the yellow metal from the world's second largest economy is continuously rising in the wake of switchover of investors to safe haven assets. The sluggish stock markets, weaker currency and lower global prices are prime reasons for the gold rush.
China Gold Association sees surge in jewellery buying. The consumption rose 3.7 percent to 985.9 metric tons in 2015. The demand picked up following the price drop on gold recently. Investors too preferred to park their funds in gold than other financial assets. China Gold Association represents jewelers, banks, brokerages, gold refiners and gold miners.
Bloomberg reports that though gold consumption increased by 3.7 percent in 2015 in China, it's well below the record level of 1,176.4 tons in 2013. The 28 percent drop in markets buoyed the gold buying in 2013. Swiss' gold exports to Hong Kong and China mainland rose 87 percent in December.
Asia accounts for over 60 percent of global gold consumption. The demand for gold is likely to continue in Asia, according to RBC Capital Markets. Gold jewellery demand rose 2.1 percent to 721.58 tons in 2015. Gold bar consumption was up 4.8 percent to 173.08 tons and coin buying rose by a whopping 78 percent to 22.8 tons.
Industrial consumption rose 3.5 percent. Bar and coin sales rose, while gold price was hovering at $1,100 an ounce. Investors consider this level of gold price is ideal for investment. Gold was trading at $1,125 an ounce on Wednesday.
The main reason for the rally in gold can be attributed to global economy slowdown and some factors in the western countries, according to CNBC. Spot gold rose 6.3 percent to $1,127 an ounce. The peak of gold price was $2,000 an ounce in September 2011.
Jiang Shu, chief analyst at Shandong Gold Financial Holdings Capital Management Co, said: "Chinese people are treating gold more as a consumption item regardless of price so demand will continue to rise steadily. To repeat the buying frenzy in 2013 will be hard unless there's a big move in prices."
Gold futures rose to three-month high after the manufacturing sector slowdown in the China and the US economy. The selloff in global equities triggered rally in gold this year. Gold futures for April rose one percent to $1,128 an ounce on New York Comex. This is highest since 3 November 2015, according to The Salt Lake Tribune.
Shandong Gold Financial Holdings Capital Management is a part of Shandong Gold Group, a mining company. China's imports of gold from Hong Kong rose 67 percent in December indicating highest monthly surge in over two years. China's central bank is also buying gold every month.
However, gold production eased 0.4 percent to 450.05 tons in 2015 owing to stoppage of operations by small and private producers. Over 700 gold mines are operational in China and half of them are suffering from losses.
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