Chinese investors are snapping up gold, enabling the country to become the world's largest buyer of investment-grade gold products.
In the first quarter of 2011, Chinese consumers purchased 90.9 tons of gold bars and coins valued at $4.1 billion, said the World Gold Council (WGC). That is more than double the amount in the same period last year, and more than the 85.6 tons bought by Indian consumers.
The two countries accounted for 51 percent of all gold products sold from January to March globally, said the WGC. Demands for gold include jewelry, industrial and dental uses and investment.
The culture's deep-rooted preference for the precious metal, the impending inflationary fears, and limited domestic investment channels will drive further growth in Chinese gold demand, said Albert Cheng, Far East Managing Director of the WGC.
China produced 340 metric tons of gold last year and consumption was about 700 tons, leaving a gap of 350 tons to 360 tons, he said.
"With an increasing demand, China will have to rely on imports to fill the gap between demand and supply," he said.
Like several other commodities, gold prices have risen noticeably in the past year, indicating simmering risks of correction, said Liu Shan'en, a senior researcher with the Beijing Gold Economic Research Center. |