China's demand for gold rose in the third quarter as a hedge
against inflation and on expectation of strong returns from the
stock market, the World Gold Council said yesterday.
Gold demand this year is expected to hit a record, the gold
advocate said.
Gold demand in China, including the mainland, Hong Kong and
Taiwan, rose 24 percent in the third quarter to 88.1 tons, the
World Gold Council said.
Mainland gold demand rose 25 percent to 78.9 tons in the three
months ending in September. Gold jewelry demand rose 24 percent in
the period to 74.8 tons, while investment gold demand rose 43
percent to 4.1 tons on China's mainland in the third quarter.
"A strong economic growth and expectation of high returns from
the red-hot stock market have given residents more money for
spending," the gold advocate said yesterday.
The benchmark Shanghai Composite Index has more than doubled in
the first three quarters this year. Investment returns have given a
shot in the arm for consumption, including spending on gold.
Rising inflation rates have also boosted demand for the metal,
seen as a traditional hedge against inflation.
China's consumer price index, the main gauge of inflation, rose
6.2 percent in September and further rose to 6.5 percent in
October.
The People's Bank of China said whole-year inflation may sit at
4.5 percent, beyond its target of three percent.
"We expect gold demand in 2007 to set a record in China," said
Wang Lixin, general manager of the World Gold Council in China,
without giving exact figures.
Rising gold prices are not likely to curb appetite for
investment gold bullion in China in the fourth quarter, though the
thirst for gold jewelry may be reined in, the council said.
Gold prices have soared 29 percent this year as the US dollar
lags and energy costs rise. Gold prices are approaching a 28-year
high, rising above US$820 an ounce.
In China, retail gold investment demand peaks at Spring Festival
as gold companies and jewelers issue investment-grade gold bars
marking the new Chinese lunar year.
Pre-sales of gold bullions marking the lunar Year of the Mouse
are healthy. China Gold Coin Inc, the country's sole wholesaler of
gold bars and coins, plans to sell three tons of gold bars on the
Chinese mainland next year.
(Shanghai Daily November 27, 2007)
