Research from the China Gold Association shows that in April, Chinese bullion buyers made a good start buying 137 tonnes of gold, almost 100 per cent higher than the previous month.
The Association spokesman said that demand this year could reach 900 to 1,000 tonnes, although today's gold rout may see gold buyers in China tempted to pick up the pace of their purchases.
China is poised to pass India as the largest bullion consumer as early as this year after New Delhi raised import taxes and Beijing made investing easier, the Association said.
Also bullish for gold consumption, China approved its first two domestic exchange traded funds (ETF's) backed by the metal this month while India raised levies to curb demand that is feeding a current-account gap.
The two countries account for more than half of global demand.
The gold price fell US $73.50 to US $1,277.80 an ounce overnight in panicked selling.
Will Chinese bullion and gold jewellery buyers seize the opportunity to increase their holdings of the yellow metal in response to the large falls in price?
Based on recent evidence, the odds are better than not. Increasing their holdings will barely make a dent on their gold holdings per capita versus the average of developed countries. Time will tell.
- Source, Proactive Investors: