Due to fewer working days in the month and manufacturers’ active replenishing ahead of the Chinese New Year (CNY) holiday, gold withdrawals from the Shanghai Gold Exchange (SGE) in February fell m-o-m.
China’s gold consumption boomed during the CNY holiday. A lower local gold price and freed-up travel budgets – due to COVID outbreaks in different regions – might have spurred consumer interest in gold products, especially Heritage gold jewellery and tiger-themed items.
The Chinese central bank has intensified its easing monetary policy efforts to accommodate the nation’s slowing economic growth.
China’s economy is facing challenges. Gold, with its unique relationship with the Chinese stock market and the independence from China’s economy, could be an effective tool for investors.
While the possible outcomes of the three-child policy and various supporting measures remain uncertain, we believe there is a link between birth rates and gold consumption, and the details are worth analysing.
Gold demand in China, in particular, investment demand, has benefited from rising concerns for the economy as well as the lowered opportunity cost amid the COVID-19 outbreak and the central bank’s response to it. But with signs of a potential economic recovery emerging, can we expect gold’s attractiveness as a safe haven in China to fade? We believe that the answer is ‘No’.
Recent indications suggest that the coronavirus (COVID-19) outbreak in China appears to be virtually contained. Even though there are still new imported infection cases, China’s reported local infections have remained near zero for a significant period.
