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China’s long tradition of gold buying means the retail business in the country is likely to remain healthy for years to come. The value of gold in Chinese culture and the country’s powerhouse economy combine to maintain a robust gold market in many regions. But even China’s market is subject to peaks and troughs and 2014 seems to be proving to be one of the dips in the cycle.
Philip Klapwijk, managing director at Hong Kong-based consultancy and advisory firm, Precious Metals Insights, says the jewellery market in the first quarter was up 10% in China, whereas bar and coin demand generally was down 55%.
“The market has been pretty weak in the second quarter of 2014,” he says. “The Shanghai premium has been fairly flat. There is a bit of a hangover after last year when people were buying ahead for events such as weddings. The general tone of the market is not as strong as it was.
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“The use of gold for financing seems to have died down a bit, which seems to be affecting the flows.