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Why a weak yuan is spurring a retail gold rush in China
The spread between the domestic and international price for the precious metal is at a decade high; Chinese consumers are racing for safety as they see their assets dwindle
By He Huifeng
South China Morning Post, Hong Kong
Tuesday, September 26, 2023
With the yuan weak, housing in the doldrums and stocks as insecure as ever, China's working and middle class are turning to one investment option that is regaining some shine: gold.
For Chinese consumers with limited access to overseas investment products, the precious metal is one of the few ways they can try to counter the shrinking value of their other assets.
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The yuan is only expected to weaken, but most Chinese individuals cannot buy U.S. dollars or U.S. dollar-denominated products to hedge against the Chinese currency's fall.
Against that backdrop, the easiest option for the public is to buy gold bars or gold jewellery at retail outlets, even if it means paying extra in processing fees.
The interest has sent spot gold prices in China to 13-year highs and widened the spread with the international price to the most in a decade.
As of Monday, the spot price of gold was over 473 yuan (US$64.71) per gram, resulting in a gap of about 4.7% between the domestic and international gold price in China.
In mid-September the retail price for gold from main brands, such as Chow Tai Fook, Chow Sang Sang, and China Gold, had risen to 600 yuan per gram, but buyers were still not deterred.
On Chinese microblogging site Weibo, one post on the rising price of gold jewellery was read more than 48 million times within a day of publication.
Fred Qiu, a business-development manager for a jewellery brand in eastern China, said there were more customers for the precious metal at his company's stores, but different products appealed to different generations.
"Little one-gram beans of gold are particularly attractive to Gen Z customers, while young couples and middle-class women prefer gold bars -- the 10-gram and 50-gram bars are especially popular,” Qiu said. ...
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