Shoppers across Asia are snapping up gold jewelry, demand that is providing significant support for gold after the precious metal’s price drop during the early weeks of 2021. Such bargain hunting sets gold apart from many other investments: when soft demand in financial markets drives prices down, consumers step in to buy.
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Chinese gold sales jumped during the recent Lunar New Year holiday, with major retailers reporting demand more than doubled, compared to last year’s depressed numbers, according to the China Gold Association.
Demand is climbing in Malaysia where a recent newspaper headline screamed, “Customers ‘mob’ goldsmiths” as a result of the recent price dip. Jewelers in India are also seeing a rebound and expect robust demand through the Akshaya Tritiya holiday, a spring festival in May when gold is considered an auspicious purchase that can assure eternal wealth.
“We have seen the best demand in the past month since the virus fear emerged in March last year, as customers came out to buy for weddings thinking prices will go up further,” Kumar Jain, owner of a jewelry store in Mumbai told Bloomberg News. Gold imports to India jumped 41 percent in February from the year-ago period to the highest level in 16 months.
In South Korea, consumers are snapping up gold bars, amid concern that rising interest rates may destabilize the stock market.
The price of gold dipped to the $1,700 an ounce level in early March, after having breached $2,000 last year. Now, strong consumer demand is helping to stabilize gold prices. “The physical market becomes increasingly important in setting the floor for prices” when investment demand eases, Standard Chartered metals analyst Suki Cooper told Bloomberg News.
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