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China Gold demand favoring Bullion over jewelry during Q1

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SHANGHAI (Scrap Register): Analysts with Citi said that growth in demand for gold bars in China has outpaced the increase in jewelry-related consumption.

Demand for gold bars rose 60.2% to 101.2 tons in the first quarter, while gold-jewelry demand rose 1.4% to 170.9 tons. Zhang Yongtao, deputy chairman of the China Gold Association, was quoted as saying that bullion remains pivotal to Chinese households that accumulate gold via bars, biscuits and coins in light of relatively weak market prices.

“Moreover, the backdrop of stagnant economic growth, financial market uncertainties and property policy restrictions all help to boost bullion sales,” Citi added.

“Conversely, gold jewelry demand growth is likely to remain flat this year. Apart from dominant and established jewelry names, the majority of small to mid-tier jewelers expect to see sluggish sales for the remainder of the year. As such, gold sales, including retail and wholesale, should remain flat at 60 billion yuan (US$8.7 billion) in 2017,” Citi noted.

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