Offshore Capitalist

China Gold Consumption

China, the world’s largest producer of gold is all set to overtake India in gold consumption. A new study from global metals consultancy GFMS says that China is all set to beat India in gold consumption.

Here are the details:

**Gold jewellery and investment demand in China in 2009 is expected to reach 432 tonnes, compared with 422 tonnes from India. It is a difference of only 10 tonnes, but it makes a lot of difference in grabbing the No 1 position! In 2008, India’s gold buying was higher at 900 tonnes.

**Bullion market in China, especially in the rural areas, is booming thanks to an increasing demand for gold investment and jewellery demand. Increased love of Chinese for gold has led to a huge rise in gold jewellery sales in China. Middle-class buyers in China, the second-biggest gold user, drove a 16 per cent gain in gold and silver jewellery sales in the first nine months of 2009.

**China’s economy grew 8.9 per cent in the third quarter, the fastest pace in a year, and the World Gold Council said in July that the nation may pass India as the biggest consumer. Bullion is on course for its ninth annual gain after US dollar weakened and demand for gold as a store of value increased.

**The Chinese have only started to buy gold as an investment product, and there’s huge room for this sector as the middle class grows. China’s household savings reached 26 trillion yuan ($3.8 trillion) this year. Gold and other jewellery sales in China are forecast to reach 260 billion yuan this year, only 1 per cent of the total household savings.

**In the last few years, China has been aggressively following pro-gold policies. China has cut the import tax on jewellery and allowed selected commercial banks to sell gold bars in a move to boost demand. Gold is now traded freely at global prices on the Shanghai Gold Exchange, and permission from the central bank is no longer required to operate as gold jewellery manufacturers, wholesalers and retailers.

via Gold Consumption: How India lost out to China | 05 December 2009 | www.commodityonline.com.

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