Gold demand in China to pick up as year continues

China's gold demand is likely to pick up in the second half of the year, driven by stimulus policies to boost consumption and investors' seeking safe-haven assets, said a trade body on Tuesday.

Wang Lixin, CEO of the World Gold Council (China), said the second half of a year is the traditional peak season for holiday-related gold jewelry consumption, which is likely to drive up demand for the precious metal.

Additionally, the introduction of various economic stimuli with a focus on consumption may contribute to the growth of gold jewelry purchase, Wang said.

WGC data showed that, in the first half, domestic gold jewelry demand surged by 17 percent year-on-year to 328 metric tons.

However, continued high or further rising gold prices may adversely affect jewelry consumption in the second half, Wang said.

He said demand for 3D-hard-pure gold jewelry products, a type of pure gold products featuring relatively lighter per-piece weight and thus lower per-piece price, will see a larger market share thanks to their extra hardness, stylish designs, diverse styles and affordability amid the rise of gold prices.

Heritage gold jewelry, a type of pure gold products featuring local cultural designs and Chinese traditional elements, will retain a stable share of the market. While gold products adorned with various gemstones may continue to be favored by young consumers, Wang said.

Investment demand in gold bars and coins segment will also grow in the second half in China driven by investors' inclination towards safe-haven assets, Wang said, adding a double-digit year-on-year growth in gold coins and bars is expected for 2023.

Meanwhile, central banks' gold buying is likely to remain strong in the second half, which may influence Chinese investors' decisions to invest in the precious metal, he said.

Demand for gold bars and coins grew by 33 percent to 115 tons in the first half, according to the WGC.