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http://www.ecns.cn/business/2013/08-13/76906.shtml
China's gold consumption rocketed by 54 percent in the first half of 2013 despite a bearish
market globally, putting the country on track to become the top bullion consumer this year.
The China Gold Association said on Monday the country's first-half gold consumption
reached 706.36 metric tons, up 53.7 percent year-on-year. Growth accelerated from the 26
percent recorded in the first quarter.
More than 70 percent of first-half consumption depended on imports because the gold output
of China, the world's largest bullion producer, was only 192.82 tons in the first six months,
8.9 percent more than a year before.
Net imports into the Chinese mainland more than doubled in the first half to 493 tons, from
about 239 tons a year ago, according to Bloomberg calculations based on Hong Kong
customs data.
The strong growth this year was mainly supported by a surge in gold-bar and jewelry
purchases, which gained 87 percent and 44 percent respectively, the China Gold Association
said. The two together accounted for more than 90 percent of the total gold consumption in
the first half.
Worldwide, the gold market is heading for its worst year in three decades. The price has
dropped 27 percent in the first six months.
Faith in the metal as a store of value also suffered from speculation that the United States
Federal Reserve will curb debt-buying, which will lead to the winding up of the quantitative-
easing environment and negatively affect gold's role as a safe-haven asset.
China was the world's second largest user last year. Data from the World Gold Council
suggested the country may overtake India to claim the top spot this year.
Demand for gold bullion and jewelry in the remainder of 2013 may be stable, according to
Yang Fei, an analyst at Seewonder Financial in Shanghai.
Buying of gold jewelry may pick up because of seasonal demand during October and at the
year-end during traditional holidays and festivals. Such demand may not be
significantlyaffected by price volatility, Yang said.
Gold may remain appealing for investors because China has been introducing more varieties
of investment products in the precious metal, Yang said, adding that investors need to look at
factors that affect gold prices beyond China's market.
"There are several globally interrelated factors that influence the gold market, including
currencies, interest rates, inflation, personal spending and systemic factors. The short-term
investment based on these themes reinforces the need for a dynamic framework in which to
think about the gold market," a World Gold Council note said.
"Jewelry, bars, coins and technological applications make up the majority of demand - and
growth in disposable income and consumer spending promote purchases of these goods.
Inparticular, as emerging markets, which account for the largest share of
demand, expand further economically, higher levels of wealth increase demand for gold," it
said.