Top Biz News

Mainland gold jewelry sales to dazzle

(China Daily/Agencies)
Updated: 2009-10-29 08:19

Hong Kong Resources Holdings Ltd, the gold company that has jumped fivefold in market value in the past year, said jewelry sales in the mainland will climb at a "double-digit" pace this year.

Middle-class buyers have helped the sales recovery. [China Daily]

Middle-class buyers, the second-biggest gold user, drove a 16-percent gain in gold and silver jewelry sales in the first nine months, Hong Kong Resources Chairman Kennedy Wong said in an interview. Record household savings are fuelling demand for investment products and wedding gifts.

China's economy grew 8.9 percent in the third quarter, the fastest pace in a year, and the World Gold Council said in July that the nation may pass India as the biggest consumer. Bullion is on course for its ninth annual gain after the dollar weakened and demand for gold as a store of value increased.

"With the Chinese economy faring exceptionally well this year, people are getting more wealth," said Ellison Chu, a metals manager with Standard Bank Asia Ltd in Hong Kong. "It's quite normal to expect that demand for gold will increase in the next two to three years."

Bullion advanced to a record $1,070.80 an ounce on Oct 14 as the dollar dropped to the lowest level since August 2008 against a basket of six major currencies and amid concern inflation may accelerate. Gold will rise to $1,200 an ounce by yearend as the dollar extends a slump, researcher CPM Group said on Oct 15.

"The Chinese have only started to buy gold as an investment product, and there is huge room for this sector as the middle class grows," said Wong, whose company has 219 jewelry stores in the mainland, eight in Hong Kong and two in Macao.

China's household savings reached 26 trillion yuan this year, Wong said. Gold and other jewelry sales in China are forecast to reach 260 billion yuan this year, only 1 percent of the total household savings, he added.

"We will see double-digit growth for years to come," said Wong. The company plans to add 100 stores in the mainland next year and another 100 in 2011, he said.

Sales in India have been poor during the holiday season amid record prices and the nation's imports will decline, Anjani Sinha, president of the Indian Bullion Market Association, said on Oct 22. Sales in India typically reach their highest point during the Hindu festival of Diwali, which this year fell on Oct 17, and the wedding season that follows.

Sales in China will also be boosted by demand for wedding jewelry, he said. "This year is particularly good for marriages and we will see increases in turnover across the board in the fourth quarter," Wong said. There are about 10 million couples getting married every year in China, according to data from the National Bureau of Statistics.

Gold for immediate delivery has advanced 18 percent this year and traded at $1,039.32 at midday yesterday in Singapore.