World's Largest Consumer of Gold

China inching closer to replace India as largest gold consumer


BEIJING: China's gold import has soared to a record of 209 tonnes this year, putting it on track to overtake India as the world's largest consumer of the yellow metal and become a significant force in global bullion prices, Press Trust of India (PTI) said.

The surge comes at a time when Chinese investors look for insurance against rising inflation and currency appreciation, the Financial Times reported.
China, already the largest bullion miner, imported more than 209 tonnes of gold during the first 10 months of the year, a five-fold increase from an estimate of 45 tonnes last year, paving the way for Beijing to overtake India as the world's largest consumer of gold.

Shanghai Gold Exchange chairman Shen Xiangrong said uncertainties about the Chinese and global economies and inflationary expectations had "made gold, as a hedging tool, very popular".

China's growing gold consumption came from all factors, including jewellery sales, private investment, as well as industrial and central bank demand.

In 2009, gold consumption in China reached 462 tonnes in all sectors and China's demand for gold has increased an average of 13% annually over the past five years, making China the world's second largest consumer market for gold after India, a local media reported.

China has encouraged retail consumption, with an announcement in August of measures to promote and regulate the local gold market, including expanding the number of banks allowed to import bullion.
The rise in Chinese demand could further inflate gold prices. Bullion hit a nominal all-time high of US$1,424.10 a troy ounce last month. But adjusted for inflation, prices are far from the 1980 peak of US$2,300, the Financial Times said.
Analysts anticipate a further leap this year, putting the country with in a striking distance of India's total gold demand of 612 tonnes in 2009, the paper said. - Bernama.