No one's in the mood to buy gold jewelry - China Gold Association
(Kitco News) - The bad news continues to pile up within China’s gold market; jewelry demand is expected to take a hit as a result of growing fears surrounding the coronavirus.
In a recent interview with Bloomberg, Zhang Yongtao, chief executive officer of the China Gold Association, said that jewelry demand is expected to plunge in the world’s top market for gold consumption. He added that a fear of the coronavirus is keeping consumers at home.
“People are not in the mood to shop for jewelry. Stores and shopping malls are closed because of the virus. The sales of gold jewelry and bars will drop substantially this year,” Yongtao said in the interview.
The comments come following dismal sales during the Lunar New Year celebrations. Nancy Wong, deputy chief executive officer of Luk Fook Holdings, said that the international jeweler saw a significant drop in store sales and daily retail traffic across mainland China, Hong Kong and Macau during the week-long holiday.
The dismal sales comes after a disappointing 2019. According to data from the World Gold Council (WGC), Chinese jewelry demand declined by 7% last year.
The WGC noted that record high gold prices in the Chinese yuan was the biggest factor weighing on demand last year. This year, it appears that the main factors impacting jewelry demand have shifted to weak economic growth and fears over the coronavirus.
Rhona O’Connell, head of market analysis for EMEA and Asia regions of INTL FCStone, said in a recent report that Chinese demand could fall 10% in 2020.
However, some market analysts are downplaying the disappointing Lunar New Year sales. In a recent interview with Kitco News, Juan Carlos Artigas, director of investment research at the WGC, said that it is too early in the year to tell how Chinese gold demand may turn out. He added that one week won’t make or break annual gold demand.
“I think when it comes to Chinese gold demand we need to take a wait-and-see approach,” he said.