China, the world’s biggest consumer of gold, saw demand for the precious metal plunge 52 percent in the second quarter from a year earlier, reflecting the impact of the government’s anti-graft efforts and the high comparison base resulting from last year’s so-called gold rush, the Hong Kong Economic Journal reported Friday.
Data released by the World Gold Council showed that China’s demand for gold in the three months to June fell to 192.5 metric tons. The agency revised downward its estimate for the country’s full-year demand for gold to 900-1,000 tons from 1,000-1,100 tons previously. The country consumed a record 1,066 tons last year.
The decline in the price of gold in the second quarter last year prompted Chinese Damas or middle-aged women to invest in the precious metal, pushing demand to a record high.
But President Xi Jinping’s campaign against corruption and bribery has dealt a serious blow to the demand for gold bars, gold coins and other luxury items. The lack of movement in the price of gold also discouraged investors from buying the yellow metal.
India, another leading gold consumer, also saw demand fall 39 percent to 204.1 tons during the period.
The drop in demand for the precious metal in the two top consumers has dragged down global demand by 16 percent to 964 tons.
The gold market is returning to its fundamentals, with investors in China and India waiting to see where the price is headed, said Marcus Grubb, managing director of the World Gold Council investment strategy department.
Chinese Damas, meanwhile, are turning to the stock market for value creation. In July alone, some 585,800 new securities accounts were opened in Shanghai and Shenzhen, up 30 percent from a month ago.
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