China's middle class regaining some shine with gold

China's middle class regaining some shine with gold

The easiest choice for the general public is to buy gold jewelry or gold bars at retail outlets, even if it means paying extra processing fees.

The yuan is expected to weaken, but most Chinese individuals cannot buy American dollars or US dollar-denominated products to hedge against the fall of the Chinese currency.

The precious metal is one of the few techniques that Chinese consumers can use to counter the shrinking value of their other assets.

With the yuan weak, housing in the doldrums and stocks as insecure as ever, China's working and middle class are turning to one investment option that is regaining some shine: gold.

The interest has led to 13-year gold prices in China andwidened the spread with the international price to the most in a decade.

As of Monday, the gold spot price was over 473 yuan per gram, causing a gap of about 4.7 per cent between the domestic and international gold prices in China.

In mid-September, the retail price for gold from top brands such as China Gold, Chow Tai Fook, and Chow Sang Sang had surged to $600 yuan per gram, but buyers were still not deterred.

On Chinese microblogging site Weibo, a post on the rising price of gold jewelry was read more than 48 million times within a day.

Fred Qiu, a business-development manager for a jewelry company in eastern China, said there were more customers for the precious metal at his company's stores, but different products appealed to different generations.

Qiu said he was confident that China would be able to meet its needs and demands in a healthy way.

A sales manager for a jewelry shop in the southern city of Guangzhou said business was on the up, with sales rising by 20-30 percent in the past two months, year-on-year.

She said some customers set aside money in each pay cheque if they wanted to be able to trade in gold.

Annie Fang, a resident of Guangzhou, is a frustrated member of China's middle class, who is watching the value of her portfolio fall, and she understands why the metal appears attractive.

For many people, the feeling of security from being able to invest abroad or buy foreign currency and move their money abroad had vanished, giving them little room to manoeuvre to safeguard their wealth.

The banking industry in China has introduced strict regulations on precious metal trading services for retail clients, such as limits on the opening of new accounts, increases in guaranteed deposit ratios, and the suspension of purchase transactions.

Although gold is not as good as US dollars, she said, people should consider buying it as a gift for friends.