Unique Drivers Behind Gold Buying During Chinese New Year
Credit: Kitco
Gold traders and investors in China are closely monitoring consumer purchases as the precious metals market prepares for Chinese New Year celebrations. Despite traditional buying trends leading up to the festival, this year's gold sales may surprise due to unique factors. Last year saw strong gold purchases in China despite record-high local prices for the precious metal. The New Year will fall on 10th February, coincides with a week long holiday period for Chinese workers.
China-based consultants at Metals Focus note the complexity of predicting gold sales for this New Year due to various unusual elements. While the Year of the Dragon typically boosts jewellery demand, several challenges may impact consumer gold purchases, including China's economic conditions, high gold prices, and competition from other activities like travel and dining out.
Rohit Savant, Vice President of Research at CPM Group, suggests that lingering effects of COVID on previous Chinese New Year seasons could actually increase this year's gold demand. Strong demand for gold has been observed in China throughout 2023 and into early 2024, contributing to the resilience of gold prices despite market fluctuations.
Savant highlights the attractiveness of gold as an investment amid downturns in Chinese equity markets and the real estate sector. He notes that the Chinese New Year presents an opportunity for investment-conscious citizens to purchase gold both as a celebration and a safe-haven asset.
Additionally, the alignment of the lunar and solar calendars this year places Valentine’s Day in the middle of the Chinese New Year holiday week, potentially boosting gold demand, although the geographical and market impact of this alignment may be limited.