China’s gold consumption drops 11% as high prices deter buyers

China’s gold consumption slipped more than 11% on a year-on-year basis for the January-September period due to higher prices. 

China consumed 741.732 tons of gold, down 11.2% year-on-year during the first three quarters of 2024, the China Gold Association said on Monday. 

The Asian giant is one of the top consumers of gold along with India. 

The high prices of gold during this year have deterred consumers from buying jewellery, which has been reflected in the data. 

Gold prices have risen more than 30% since the beginning of the year due to rate-cut optimism and geopolitical tensions. 

The most active December gold contract on COMEX had risen to a record high of $2,772.60 per ounce earlier this month. 

Jewellery buying slips

China’s jewellery consumption, which accounts for nearly 54% of total demand for the yellow metal, was sharply down during the first nine months of the year. 

During January-September, jewellery consumption slipped 27.5% to 400.038 tons from the year-ago period. 

The association said:

According to the data, the year-on-year use of gold for industrial purposes and other uses fell 2.8% to 58.973 tons during the first three quarters of this year. 

“In the first three quarters, the price of gold continued to rise, and the consumption of gold jewellery was significantly affected,” the association said. 

Gold output falls as well

According to the latest statistics, China’s domestic raw gold production was at 268.068 tons during January-September, down by 3.180 tons compared with the corresponding period last year. 

The association said 209.710 tons of gold was produced from gold mines and 58.358 tons were from non-ferrous by-products. 

In addition, during the first three quarters of 2024, 111.207 tons of gold were produced from imported raw materials, a year-on-year increase of 15.3%.

The association said:

Trading volumes rise

In the first three quarters of this year, the cumulative bilateral trading volume of all gold varieties in the Shanghai Gold Exchange was 46,500 tons, rising 47.5% on-year. 

Also, the domestic gold exchange-traded fund (ETF) holdings rose to 91.39 tons, an increase of 29.93 tons from the end of 2023. This was an increase of 48.7%. 

During January-September, “geopolitical conflicts continued, the global economic recovery was weak, and the hedging function of gold was re-emphasized,” the association said. 

At the time of writing, the most active December gold contract on COMEX was at $2,744.65 per ounce, down 0.4% from the previous close. 

As gold prices continued to rise, buoyed by safe-haven demand and increasing bets on the US Federal Reserve cutting interest rates further, consumption of the precious metal is expected to suffer in top consumers such as China and India, according to Commerzbank AG.