Chinese consumers and investors are enthusiastic about and confident in gold although the international gold prices have soared to new records.
The gold prices at Shuibei market, China's largest gold jewelry trading hub based in Shenzhen City of south China's Guangdong Province, reached 690 yuan (about 94.42 U.S. dollars) per gram on Tuesday.
The soaring prices have not dampened Chinese consumers' enthusiasm for buying gold accessories. Instead, the Shuibei market has recently seen high foot traffic after the eight-day Spring Festival holiday running from Jan 28 to Feb 4.
"We resumed operation on the eighth day of the first month of the Chinese lunar calendar [on Feb 6]. Gold prices hit a record level on that day. Despite the high prices, consumers were still enthusiastic and the foot traffic was relatively high," said Zhao Li, operation director of Shuibei's Gold Plaza, a commercial complex of middle and high-end jewelry brands.
The gold recycling market is also booming as the rising prices have made many gold holders choose to sell their assets at a profit.
A manager of a gold store in Shenzhen's Futian District said they have seen significant growth in recycling business since the beginning of this year.
"If the gold was purchased a few years ago, the price may be 200 yuan higher per gram now. So, many customers choose to recycle their old gold assets. Since the Spring Festival, our recycling business has increased by 50 percent compared to the same period last year," said Lin Zishan, head of a gold store.
The hikes in gold prices have also driven the sales of investment gold bars at banks.
A branch of the Agricultural Bank of China in Beijing's Chaoyang District has seen a year-on-year growth of 15 percent in sales of investment gold bars since the end of 2024.
As the rising gold prices promote the gold accumulation business, the Bank of China, the country's central bank, has announced to raise the purchase threshold of the personal gold accumulation account to 700 yuan starting from Feb 10.
The gold accumulation refers to a service for customers to buy gold asset equity in regular periods or at own choices. The equity can be redeemed or converted into physical precious metal to make profits.
"Investors buy gold assets at real-time prices. If they want to get the money back, then the gold will be redeemed at the price of the day. If the prices go up, the gold will make benefit for investors. From December of last year to now, our [gold accumulation] sales have increased by 15 percent compared to the same period of last year," said Liu Jing, deputy director of the business office of the Agricultural Bank of China Beijing Chaoyang East branch.
However, industry insiders have made risk warnings as the gold prices continue to hit record highs.
"The continuous extension of the U.S. tariff policy will remain a short-term factor for the market to buy gold in response to uncertainties. Meanwhile, due to the existing space for arbitrage, investors should be alert to the risk of a high correction in the short-term gold prices caused by repeated market news," said Cao Hui, a precious metal industry researcher at Sublime China Information, a commodity data service company.
Surging gold prices have heed China's A-share market up, with gold concept stocks spurring a general rally. On Tuesday, China Gold Group hit limit up, while major Chinese jewelry brands including CHJ, Chow Tai Seng and Lao Feng Xiang rising more than 4 percent.
From the perspective of fund flow, gold-related exchange-traded funds (ETFs) have recently been favored by investors. Many products have received net inflows, and the yield has also gone up. The ETFs of E Fund Management Company and HuaAn Fund Management Company have climbed by 11.06 percent and 11.07 percent, respectively, since the beginning of this year.
"Geopolitics and trade frictions have disturbed the market. These risk events have made gold a safe haven asset that has attracted the attention of global investors. In 2024, global central banks increased their gold holdings of more than 1,000 tons, which also generated a driving force in gold purchase," said Wang Lele, a fund manager of Fullgoal Fund Shanghai Gold ETF.
Amid the growing risks posed by the record-high gold prices, the Shanghai Gold Exchange on Monday issued an announcement about the sharp fluctuations in precious metal prices and the intensification of market risks, reminding investors to take precautions, reasonably control their positions and invest rationally.
Chinese consumers, investors confident in gold amid soaring prices
