China 2019 gold consumption drops on high prices, economic slowdown

A sales assistant takes out gold ornaments for a customer at Caibai Jewelry store, in Beijing, China, August 6, 2019. REUTERS/Jason Lee/Files

BEIJING (Reuters) - China’s gold consumption fell for the first time in three years in 2019, figures released by the country’s gold association showed on Tuesday, as high prices and an economic slowdown hit buying in the world’s biggest gold market.

China consumed a total of 1,002.78 tonnes of gold in 2019, down 12.91% year-on-year, the China Gold Association said in a statement on its website.

The drop was due to downward pressure on the Chinese economy as well as rising prices for the precious metal in the second half of last year, the association said.

Spot gold prices climbed by 18.3% over 2019, mainly driven by policy easing by major central banks amid the Sino-U.S. trade war, reducing the cost of holding bullion.

“The high price ... has led investors in solid gold to adopt a ‘wait and see’ stance and sales of gold bars by key enterprises and commercial banks have also fallen sharply,” the association said.

Consumption of gold jewellery in China was down 8.16% to 676.23 tonnes in 2019, while that of gold bars and coins tumbled by 26.97% to 225.8 tonnes.

China’s own gold production last year was down 5.21% at 380.23 tonnes, sliding for a third straight year as resources depleted, although the association noted this was partly offset by a 6.57% rise in raw material imports.

“The sharp reduction in production of domestic gold mines has resulted in tighter supply ... and an increase in imported gold smelting raw materials, which have become an important supplement to China’s production,” it said.

Reporting by Tom Daly; Editing by Himani Sarkar and Mark Potter