Gold consumption in China, the world’s largest user after India, jumped 54 percent in the first half this year, putting the country on track to become the top bullion consumer at a time when demand is contracting elsewhere.
Consumption reached 706.36 tonnes in the first six months, the China Gold Association said in an e-mailed report yesterday.
Gold-bar purchases surged 87 percent to 278.81 tonnes, while jewelry gained 44 percent to 383.86 tonnes, it said.
Demand accelerated from growth of 26 percent in the first quarter, according to data from the association, which is funded by miners, refiners, retailers and jewelry makers.
Gold is heading for its worst year in three decades as some investors lost faith in the metal as a store of value and amid speculation the US Federal Reserve will curb debt-buying.
India doubled a tax on inbound shipments and curbed financing to tackle a surge in demand after the metal entered a bear market in April. China is the world’s largest gold producer.
“China may overtake India as the biggest consumer as early as this year,” said Zhang Wei (張偉), an analyst at Zhaojin Futures Co in Zhaoyuan.
“Demand in China has great potential to improve further as the country encourages private sector holdings,” he added.
Bullion of 99.99 percent purity on the Shanghai Gold Exchange dropped 27 percent in the first six months, and was at 265.90 yuan (US$44.50) a gram at 2:12pm in Beijing.
In London, gold for immediate delivery traded 21 percent lower this year at US$1,329.15 an ounce.
India will curtail gold imports below 766.5 tonnes this year as Asia’s third-biggest economy takes steps to curb a record current-account deficit and defend the currency, Indian Finance Minister Palaniappan Chidambaram said on July 31.
The country has doubled a tax on imports this year and tightened rules on overseas purchases to tackle a surge in demand.
Net imports into China more than doubled in the first half to 447 tonnes, from about 217 tonnes a year ago, according to Bloomberg calculations based on Hong Kong customs data.