Gold demand bounces back to shine bright again

China's gold demand is likely to rebound on the back of the economic recovery momentum, supporting its role to be the world's largest gold-consuming country this year, amid optimized COVID-19 measures and bolstered domestic consumption, experts said.

"China has seen dampened demand as a result of the pandemic in recent years. However, with the optimization of COVID-19 control measures, we are optimistic that China's gold demand will bounce back from what is likely a short-lived and circumstantial dip in demand," said Louise Street, senior markets analyst at the World Gold Council.

"Looking ahead, the positive seasonality in the first quarter and strong central bank demand could be key drivers in keeping China in the position of the world's largest gold-consuming country in 2023," Street said.

The WGC said China has maintained its position as the world's largest consumer of gold since 2013. Although the country's demand for gold jewelry fell behind India in 2022 due to dampened demand amid the pandemic, gold jewelry still holds favor with consumers and its consumption will pick up to a leading position globally this year.

"Looking ahead in 2023, demand for gold jewelry and investment will likely pick up buoyed by the improving economic environment and rising household disposable incomes. Commercial banks' continuous efforts to promote physical gold sales will also propel demand for the precious metal. In addition, gold's role as a safe-haven asset will continue to attract investors," said Wang Lixin, regional CEO of the WGC (China).

Bolstered by a release of pent-up demand as China optimizes COVID-19 control measures, the global market will also likely see jewelry consumption remain resilient this year, said the WGC.

The WGC said China's demand for gold jewelry in 2022 was 571 metric tons, down 15 percent from 2021 and 113 tons less than the 10-year average. Demand for gold bars and coins stood at 218 tons, down 24 percent on a yearly basis.

Data from the China Gold Association showed that overall consumption of the yellow metal in China dropped 10.63 percent from the previous year to 1,001.74 tons in 2022.Gold prices remained at high levels due to the pandemic, geopolitical conflicts, the slowdown of the global economy and rising inflation.

The WGC said China has also been the world's largest gold producer since 2007, representing an estimated 10 percent of the world's total mined gold production in 2022.

The CGA said China saw output of 372.048 tons of gold in 2022, up 43.065 tons, or 13.09 percent, year-on-year.

Major domestic gold companies have been actively pushing forward mergers and reorganizations, as well as resource mergers and acquisitions at home and abroad, the CGA said.

China's gold producers, including Zijin Mining, Shandong Gold Group Co Ltd and Chifeng Gold, saw their mineral gold output from overseas' mines reach 51.05 tons last year, up 32.14 percent year-on-year, it said.

Contact the writers at liuyukun@chinadaily.com.cn