The Chinese Are Going for Gold

28-Apr (Wall Street Journal) — China’s gold consumption showed signs of recovering in the first three months this year after plunging in 2014, as relatively low bullion prices attract Asian interest, especially in gold jewelry.

Demand in the first quarter rose 1.1% compared with a year earlier to 326.68 metric tons, China Gold Association president Song Xin said Tuesday.

China is likely to maintain this trend in demand growth for the rest of this year, Mr. Song said at an industry conference.

…Physical demand in China is still comfortably ahead of previous years, before an extraordinary bargain-driven consumption surge in 2013, said Philip Klapwijk, managing director of Precious Metals Insights Ltd., a consultancy.

Even a rally in gold prices won’t necessarily dent gold’s demand recovery. Weaker-than-expected U.S. manufacturing indicators in April may loosen the Federal Reserve’s monetary policy, which in turn might underpin gold as it would suppress bond yields and lead more investors to consider buying gold, Singapore-based Phillip Futures Pte. Ltd. said in a note Tuesday.

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PG View: The demand “plunge” in 2014 was more a return to the sustainable trend after the “extraordinary bargain-driven” surge in demand that was seen the previous years.