By Casey Hall, Xihao Jiang and David Kirton
SHANGHAI (Reuters) -Chinese consumers have long been lovers of gold, but record high prices are having an impact on buyers’ purchasing power when it comes to shopping for jewelry or for buying for investment purposes.
Gold has surged more than 50% this year to a record high price above $4,000 an ounce, driven partly by uncertainty about the global economy and geopolitical tensions.
In China, the country’s economic troubles, including a weak property market, have boosted people’s appetite for gold as an investment.
But gold’s record-breaking run means that the per gram price of gold has increased to more than 1,160 yuan ($162.93) at many retailers in China this week, compared with around 630 yuan in January, according to state media reports.
Yan Lixiaofeng, who runs wholesale gold dealer Shenzhen Shenhui Jewelry in Shuibei, China’s largest wholesale jewelry market, told Reuters, transactions are down around 60% this year, compared with an average year.
“Before, with 1,000 yuan, our customers could buy about three grams of gold jewelry; now, 1,000 yuan only buys one gram. The difference is huge,” Yan said.
At one of Shanghai’s largest gold markets, store managers and shop assistants said more consumers were buying gold than selling it, but most transactions were trade-ins, as customers look to exchange older-style jewellery for newer designs.
“As far as gold consumption is concerned, it’s still generally high, but the recent increase in price is quite significant,” said Wang Haichuan, who works at a store in the market. He said the price rise had deterred some, though it had also encouraged others to buy more.
“Most people think it will continue to rise,” he said.
Customers at the Shanghai market on Thursday were still bullish about gold prices.
“I’m not a financial manager, so I don’t know for sure, (but) I think it will still increase a bit,” customer Zeng Shuangshuang said.
Another customer He Meihong said: “I think there’s still some room for investment opportunities.”
(Reporting by Casey Hall, Xihao Jiang in Shanghai and David Kirton in Shenzhen. Editing by Jane Merriman)
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