Original title: Rising demand for gold consumption and investment

Economic Daily reporter Ma Chunyang

Since this year, with the rapid rise of the international gold price, the domestic gold price has been climbing, and the gold consumption market is hot. During the May Day holiday, the reporter visited many gold and jewelry stores in Beijing and found that many brands launched preferential activities, and customers came to consult and purchase gold jewelry in an endless stream.

Jewelry gold consumption tends to be rational

When the reporter came to the store of Beijing Caishikou Department Store Co., Ltd. in Xicheng District, he saw that the gold jewelry counter on the first floor was full of customers.

"There were activities during the May Day holiday, and the gold price has recently dropped, so the overall sales situation is quite good." The salesperson told the reporter that the gold price changes every day, and indeed it has "persuaded" some consumers. At present, most of the people who buy gold jewelry are those who just need to get married and those who love themselves.

Since March, the international gold price has repeatedly hit a record high. Although it has been adjusted, the gold price at a historical high has kept some consumers rational. According to the data released by the China Gold Association, the national gold consumption in the first quarter was 308.905 tons, an increase of 5.94% compared with the same period in 2023. Among them, 183.922 tons of gold jewelry, down 3% year on year.

The relevant person in charge of the China Gold Association said that in the first quarter of this year, the rapidly rising gold price, combined with factors such as gold jewelry processing fees and brand premium, increased consumer wait-and-see sentiment, which restrained gold jewelry consumption. High gold prices and sharp fluctuations have increased the production and operation risks of gold processing and sales enterprises. Wholesale and retail enterprises are cautious in purchasing, and the cost of raw materials for jewelry processing enterprises has risen.

Wang Lixin, CEO of the World Gold Association in China, believes that although the demand for gold jewelry in the first quarter fell slightly year-on-year, it is still higher than the 10-year average. Before and after the Spring Festival holiday is the traditional golden period for gold jewelry consumption, and the strong performance of gold in the market has also inspired consumers to maintain value and save money.

Gold bars and coins are popular

Gold bars and coins with lower premium and stronger investment attribute are favored by consumers. "Buying gold bars and playing gold ornaments" has become a new choice for many young consumers. Buy gold bars first, and then go to the gold store to process them into jewelry. You only need to pay a small amount of labor fees, which is cheaper than buying gold jewelry directly in the brand store.

The reporter noticed that in addition to the consumers who came to buy gold, there are many consumers who hold old gold jewelry and consult the gold repurchase business in the shop. Some consumers said that they would consider cashing out their gold while the gold price was high.

According to the data of China Gold Association, the consumption of gold bars and coins in the first quarter was 106.323 tons, up 26.77% year on year. Liu Xiangdong, chief analyst of Dongyuan Investment, said that the rise in consumption of gold bars and coins was related to investors' demand for risk aversion when gold prices were high, and the high attention paid to physical gold investment.

Wu Dan, a researcher at the Bank of China Research Institute, told the reporter that gold jewelry has a beautiful shape and strong sense of design, and often has higher processing fees, which means that compared with simple shaped gold bars and coins, gold jewelry will have a higher premium. Against the background of rising gold prices, the investment demand of residents to buy gold prevails, preferring to buy gold at a low premium to maintain and increase its value, driving up the consumption of gold bars and coins.

Industry insiders said that in terms of repurchase business, whether it is gold bars or gold jewellery, the repurchase price is equal to the real-time gold price of the day minus the service charge, which varies from 2 to 5 yuan per gram, and gold jewellery may also deduct 1% to 2% of the loss.

At present, the domestic entities providing gold repurchase business include gold jewelry stores, commercial banks, as well as some pawnshops and individual merchants. Liu Xiangdong reminded that when consumers participate in the repurchase business, they must choose regular merchants. It is best to go to the shops they bought at the beginning to buy back, and bring product certificates and purchase vouchers.

The consumption craze is expected to continue

Experts generally believe that although the high gold price will restrain jewelry gold consumption in the short term, in the long term, Chinese consumers have a large demand for gold, and the domestic gold consumption boom is expected to continue.

"Gold has many beautiful meanings in China, and has become a strong demand in marriage, gifts and other scenarios." Wu Dan believes that with the technological innovation of the gold industry, gold jewelry in recent years is more in line with the consumption concept of young people, and products such as Xiaoke and Guochao are favored, which is expected to boost the consumption demand of gold jewelry.

Wang Lixin analyzed that the domestic retail investment demand for gold may still maintain a healthy level in the second half of the year. The domestic prudent and appropriate monetary policy may further reduce interest rates, and the attractiveness of gold is expected to increase. As the global central banks maintain a record pace of purchasing gold, investors' interest in gold may also continue to rise.

In the view of market participants, with the growth of demand, the competition in the gold consumption market will also intensify, which will urge gold processing and sales enterprises to improve product quality and service level.

Huatai Securities Research News shows that under the background of the continuous rise of gold price and the differentiation of consumption, the high-end of gold jewelry consumption market and the opportunity of cost performance coexist. The main characteristics of current jewelry consumers are to pay attention to both quality and price. Based on the ancient gold technology and the upward trend of gold price, it is expected to help jewelry brands quickly improve their influence.