China is now the world’s biggest buyer of gold surpassing India, however Chinese consumers are actually buying less gold, even as prices hit a four-year low last week. CCTV America’s Mi Jiayi reported this story.
Gold purchases decline in China even as prices dropChina is now the world's biggest buyer of gold surpassing India, however Chinese consumers are actually buying less gold, even as prices hit a four-year low last week. CCTV America’s Mi Jiayi reported this story.
In just 10 days in April 2013, Chinese investors purchased 300 tons of gold that sold for $1,330 an ounce. Since then, the price has dropped, to $1,145 per ounce, but the demand for gold has not gone up. The China Gold Association says Chinese customers bought more than 750 tons of gold between January-September, representing a 21 percent drop from last year.
The decline comes a year after a rush of middle-aged women, known as da ma, purchased gold as an investment in 2013.
“Of course the current demand can’t be compared with that during the Chinese da ma gold rush last year. Customers now are generally more rational when making purchase or investment decisions,” said Ding Yingchun, a floor manager at the Laomiao Jewelry flagship store.
Analysts say the drop in gold prices over the past two years is mostly due to the gradual recovery of the U.S economy and the U.S Federal Reserve phasing out its Quantitative Easing program. The increasing strength of the U.S dollar in the past six months has led to further price drops. But there is good news for investors.
“We believe much risk has been released after the recent gold price drop of more than $100 per ounce and we predict that the gold price will be more stable in the next couple of months,” said Liu Xiao a trader with the ICBC Precious Metals Trading Center.
Fund manager Axel Merk discusses decline of gold
CCTV America interviewed fund manager Axel Merk about the decline in gold purchases despite falling prices.