A relaxation in COVID-19 restrictions and the anticipation of higher demand ahead of the Chinese New Year are driving a rise in gold prices in China. Gold prices reached their highest level earlier this week on 17th January after six months as spot gold jumped to $1,816.69 per ounce by 1:52 p.m. ET (1852 GMT), rising to $1,832.99.
"Gold is following the decisions by China to further ease COVID restrictions," on the anticipation of higher demand from the region and in spite of rising yields," Bob Haberkorn, senior market strategist at brokerage firm RJO Futures told news agency Reuters in an interview.
A report by the World Gold Council on China’s gold market predicts that China’s economic recovery and gold consumption are likely to benefit from the relaxation of the strict zero-COVID policy.
The report also mentions that local gold consumption is also likely to receive traditional festive boosts from the Chinese New Year’s (CNY) holiday in late January.
Bloomberg’s median forecast predicts that China’s GDP growth is likely to reach 4.8 percent in 2023. This growth is also likely to drive the local gold consumption.
China’s gold demand is also likely to benefit from the government’s efforts to stimulate consumption, as indicated by China's year-end Central Economic Work Conference chaired by Chinese President Xi Jinping.
The report by the World Gold Council about China’s gold jewellery market predicted a robust growth in Q1 2023 for China’s gold jewellery consumption.
The report suggests that 'self-wear' is likely to be the most important important reason to buy jewellery. The report indicates that “self-wear” has become the most important jewellery shopping occasion, making up nearly 40% of retail revenue among survey respondents.
Wedding related purchases of jewellery are likely to contribute 20 percent of the total revenue.
