By Sophie Song - China’s demand for gold exceeded 1,000 tonnes (1,102 tons) for the first time in 2013, a 41 percent leap from 2012, says the China Gold Association.
The surge in consumption, fueled by a 28 percent slide in gold prices in early 2013, makes China the biggest gold consumer in the world. By contract, demand dropped in India, the other major gold consumer.
According to statistics on the China Gold Association website, China consumed 1,176.40 tonnes of gold last year, with jewelry demand climbing 43 percent to 716.50 tonnes, and bullion demand leaping 57 percent to 375.73 tonnes.
"The sharply lower prices attracted a lot of Chinese consumers looking for bargains," said Chen Min, an analyst at Jinrui Futures in Shenzhen, according to the Economic Times. "Gold will continue to be an attractive investment in China in the near term as prices look steady near $1,200 an ounce.”
The demand surge was affectionately dubbed the "Granny Effect" in China, as middle-aged and elderly Chinese women, attracted by low prices, lined up outside gold shops both in mainland China and in Hong Kong to buy every piece of gold jewelry and bullion they could lay their hands on.
Correspondingly, China’s production of gold rose as well, to 428.16 tons, a jump of 6.2 percent dwarfed by the country’s surge in demand. Even so, China remains the world’s biggest producer of gold for the seventh year running.
The figures from the China Gold Association do not take into account demand from the Chinese central bank, whose reserves stand at 1,054 tonnes, according to the latest number on the central bank’s website, which was announced in April 2009. Market speculation suggests that the bank may have been accumulating reserves and would soon announce a new figure, the Economic Times reported.