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.
The coronavirus (COVID-19) outbreak supported demand for gold as a safe-haven asset as stocks and commodities fell sharply. Physical gold demand faltered domestically due to COVID-19 and seasonality factors.
On 25th January 2020, people throughout China will celebrate the start of a new year – the most important festival in the Chinese lunar calendar. This will kick off Year of the Rat and begin another rotation of the twelve zodiac signs. Most people are already in a festive mood, and, as a result, so is China’s gold market.
China’s first exchange-traded gold future’s option was listed on 20th December 2019 on the Shanghai Futures Exchange (SHFE). While gold options already existed in China, these were traded over-the-counter (OTC) on the OTC market platform at the Shanghai Gold Exchange (SGE) and linked to physical gold products.
Co-hosted by China Gold Association, World Gold Council, Shanghai Gold Exchange, Shanghai Futures Exchange and the Shanghai Gold and Jewellery Association, the 2019 Annual Precious Metals Conference was held in Shanghai on 10th and 11th December. Over 400 gold industry leaders and representatives from China and other regions participated. Here are a few key takeaways.
Summary
The discovery of the process to harden pure gold has formed the foundation for all innovative pure gold products and become an important feature favoured by consumers and jewellers... The hard-pure gold jewellery market is booming but lacks an industry standard defining these products and providing industry guidance.
The World Gold Council China team has been working with the National Jewellery Standardisation Committee, industry associations and leading Chinese jewellers, to draft proper standards for hard-pure gold jewelleries.
The Beijing International Jewellery Fair kicked off on 14th November, attracting thousands of exhibitors from over 20 different countries and regions. On the coldest day so far this year in Beijing, exhibitors shared the hottest trends in the gold jewellery industry.
In recent years, expansion into tier three and four cities has been a major strategic focus for many Chinese jewellery retailers. Chow Tai Fook (CFT), a leading retailer based in Hong Kong, added 251 points of sales (POS) in lower tier cities in 2018 compared to only 50 in tier one cities. Lao Feng Xiang, another large jeweller with 3,521 POS domestically, also prioritised expansion into lower tier cities.
Madame Wu Xiaoling, Chairwoman of the Board of the PBC School of Finance, Tsinghua University and former Deputy Governor of the People’s Bank of China, believes that gold has a crucial role to play in China’s continuing development and the internationalisation of the RMB.
Recycled gold is an important source of gold supply . In 2018, the volume of recycled gold reached 1,168t, accounting for over 25% of total supply globally. Recycled gold is also an important source of supply in China, amounting to 146t, or 20% of domestic supply in 2018. Recently, China’s recycled gold market has experienced some exciting developments which could improve the efficiency and transparency of the industry.
