Gold demand to increase in China

Beijing - China’s gold demand will keep expanding as investors seek safe assets and jewelry buying increases, the China Gold Association said.

Consumption in the country that vies with India as the world’s biggest user climbed 3.7% to 985.9 metric tons in 2015 from a year earlier, according to group data released on Wednesday. Demand rose as prices declined and investors allocated more wealth to the safety of bullion than to other financial assets, according to the association, which represents jewelers, refiners, banks, brokerages and miners.

Stock market turmoil, a weakening currency and the lowest global prices in almost six years have helped boost bullion buying in China. Swiss exports of gold to Hong Kong and the mainland jumped 87% in December from a month earlier, underscoring the flow of metal from west to east. Demand in Asia, which accounts for more than 60% of global use, is fundamentally strong, RBC Capital Markets said this week.

Gold jewelry demand gained 2.1% to 721.58 tons last year, while bar consumption added 4.8% to 173.08 tons and coin buying rose 78% to 22.8 tons, group data show. Industrial use increased 3.5%. Bar and coin sales climbed as some investors considered $1 100 an ounce good investment value, the group said. Bullion traded at $1 128 on Wednesday.

Gold output fell 0.4% to 450.05 tons in 2015 as some small, private producers halted operations, the group said. There are more than 700 gold mines in China and about half are suffering losses at current prices, it said.