China's shifting trends with gold: Demand for bars and coins rise as jewellery shopping slumps

China's economic slowdown has ignited the demand for safe-haven assets like Gold. Purchase of gold bars and coins surged by 46 per cent in the first half of the year. The figure represents 40 per cent of the national gold consumption. However, the overall consumption is 5.61 per cent lower than the previous year. Industrial use of gold also fell by 0.53 per cent year-on-year.

A trend to note is the reduced expenditure on expensive gold jewellery and more buying of bars and coins. The segment saw a 26.68 per cent year-on-year decline. This shows that Chinese consumers view gold as an investment option rather than a 'statement'. This also depicts low domestic demand due to reduced purchasing power. This dim economic outlook has fuelled gold's rise since the start of the year.

Central banks and consumers splurge on Gold

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Gold prices have breached record highs this year, driven by record purchasing by global central banks and rising investor confidence in using gold as a hedge. Gold prices have surged 20 per cent since the start of the year. The World Gold Council reports that the 2024 quarter was the strongest quarter since 2016. The council also notes that the central banks' net demand totalled 289.7 metric tonnes in the first quarter, the strongest demand ever.

The People's Bank of China's gold buying spree had made it the world's largest institutional buyer in 2023, with purchases totalling 225 tonnes. This aggressive buying contributed significantly to the global gold price surge. However, high gold prices may have temporarily deterred further purchases. According to the world gold council, emerging markets, particularly India and Turkiye, continue to drive gold demand in 2024, with investment in gold bars and coins remaining popular.

Meanwhile, India is leading among Asian G20 countries in the highest value of gold as a percentage of total reserves.