China's gold demand showed strong recovery in 2023 as its central bank and retail consumers alike turned to the safe-haven asset.
The country's gold consumption rose 8.78% year over year to 1,089.69 metric tons in 2023, according to China Gold Association data released Jan. 25.
Sales of gold jewelry rose 7.97% to 706.48 metric tons in 2023, boosted by innovations and lightweight designs of gold jewelry products, the group said. Sales of gold coins and bars rose 15.70% to 299.60 metric tons, driven by high investment demand for physical gold, while gold for industrial and other sector usage fell 5.50% to 83.61 metric tons, according to the association.
People's Bank of China reported consecutive monthly gold purchases since November 2022, joining global peers to hedge against geopolitical uncertainty and reduce US dollar or dollar-denominated assets on expectations of interest rate cuts. China's central bank added 224.88 metric tons of gold in 2023, bringing its gold reserve to 2,235.41 metric tons as of end-2023.
"Gold's attractiveness was further boosted by the increasing need of households to preserve value: The local gold price's outstanding performance drew their attention when the currency and other Chinese assets weakened," Ray Jia, senior analyst at World Gold Council, said in a Jan. 18 note.
Gold prices hit an all-time high in 2023 on geopolitical tensions and investors' bets on Federal Reserve interest rate cuts. The Shanghai Gold Benchmark Price rose 17% in 2023, outperforming the performance of all major yuan-denominated assets, according to Jia. Local gold prices were trading at a record premium against London Bullion Market Association prices due to yuan depreciation against the US dollar, Jia said.
China's gold production rose 0.84% year over year to 375.155 metric tons in 2023, the association said. Chinese miners including Zijin Mining Group Co. Ltd., Shandong Gold Group Co. Ltd. and Chifeng Jilong Gold Mining Co. Ltd. collectively mined 60.378 metric tons of gold overseas, rising 18.28% from a year ago.