In Beijing, the value of pure gold has surpassed 430 yuan per gram, but consumer eagerness is just as immense as gold prices move higher. Two months to go to celebrate the Chinese traditional lunar Year of the Dragon. Chinese people have cultural and historical demand for gold and silver, as both jewelry and status. The peak season for gold sales this year coincides with the New Year holiday and the Chinese Spring Festival.
Chinese investors have rushed to buy precious metals to hedge against rising inflation, where the Consumer Price Index (CPI) shot up to 5.5 % year-on-year in October, showing the world’s second largest economy is suffering the fastest growing price in almost three years.
The benchmark interest rate of one-year deposits still stood at 3.25 % after the central bank raised the interest rate twice this year to curb inflation. Analysts say the continuous decline of the U.S. dollar and Euro has stimulated investors to choose safe haven products such as gold.
Buying gold as means of investment has become more a common choice for Chinese in the past third quarter as it is viewed as a safe investment during these uncertain economic times, said the World Gold Council (WGC) in its Gold Demand Trends report for the third quarter of 2011.