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China's young generation powering gold rush

Xinhua | Updated: 2024-02-13 06:57

Customers view gold jewelry at a gold shop in Jinan, capital of East China's Shandong province, Jan 27, 2024. [Photo/Xinhua]

JINAN/GUIYANG -- Gold had once lost its popularity in China as mainstream consumers turned to diamonds and other gems due to changing consumption perceptions.

However, the precious metal has regained its lost glitter as a new gold rush is on, with China's younger population leading the way.

According to China Gold Association, in 2023, the national gold consumption reached nearly 1,090 tons, an increase of 8.78 percent year-on-year. Of the total, the gold jewelry consumption hit 706.48 tons, a year-on-year increase of 7.97 percent, and the old bars and coins saw 299.6 tons, up 15.7 percent year-on-year.

The young population aged between 25 and 34 became the main force of gold consumption, with their proportion up from 16 percent to 59 percent in 2023. In the future, consumers under the age of 25 will become new major gold buyers, said the association.

There are various factors at play behind the growing demand for gold among Chinese youth.

On the one hand, as the China Chic phenomenon resurfaces, jewelers go out of their way to create more fashionable gold jewelry infused with traditional Chinese aesthetics and cultural elements, attracting more and more young consumers.

Young Chinese, on the other hand, see gold as an investment commodity thanks to the relatively bullish performance of gold in the capital market in recent years.

Gold rush

Ahead of the Spring Festival holiday, gold shops in the country have seen a large flow of consumers, many of whom are young people.

Wang Yinghao and Zhao Wenxiu, a couple in their 20s, spent more than 7,000 yuan (around $1,000) buying their parents a gold necklace and bracelet from a gold shop in Jinan, capital of East China's Shandong province.

"Today's gold jewelry have delicate design styles. Our parents were very happy when I showed them the pictures," said Zhao.

According to Xia Liuxia, head of the gold shop, pure gold necklaces, bracelets, rings and other items worth between 2,000 yuan and 3,000 yuan are most popular among young consumers. The stylish and innovative designs is one of the major reasons that has caught their attention.

Besides the fashion identity, young Chinese consumers choose gold jewelry also for investment reasons.

Tang Gang, a 28-year-old young man from southwest China's Guizhou province, got married to his girlfriend in May 2023. Prior to their wedding ceremony, he followed the traditional Chinese custom and bought his girlfriend a "gold trio set" consisting of a gold ring, bracelet, and necklace, instead of buying a diamond ring.

"In recent years, the price of gold continues to grow. A 'gold trio set' generally costs more than 30,000 yuan, but the relatively high price has not hindered consumers' enthusiasm as gold can maintain value over the long term compared to diamonds," said Xia.

China chic

China Chic features fancy designs mixed with elements from the traditional culture. In recent years, the China Chic phenomenon has been warmly embraced by the younger generation.

As a result, a growing number of Chinese gold jewelers are joining the trend and designing jewelry products bearing traditional Chinese cultural elements to satisfy young consumers' aesthetics needs.

At the gold shop in Jinan, a lock-shaped gold pendant engraved with koi fish and lotus, two auspicious patterns in China, is one of the bestsellers and most popular gold jewelry items on Xiaohongshu, China's leading lifestyle social platform, said Xia.

"The lock has an exquisite design and adopts an ancient engraving craftsmanship," said Xia. "But the price is not high. Many young consumers come to look for it."

The upgrading of ancient Chinese gold craftsmanship such as "gufa gold" and "hard gold" in recent years provides more possibilities for novel designs.

"We are actively engaged in exchanges and cooperation with universities, inheritors of intangible cultural heritages, and cultural and art institutions, to better explore the integration of traditional culture with innovation in gold jewelry designs and techniques, bringing vitality to the gold industry," Ding Xiaokang, head of retail business of Shandong Gold Group.

In the not-too-distant past, gold symbolized the pass taste of older generations, but now it is a statement of Generation Z identity that represents both personal style and cultural loyalty, said Wang Zhongwu, professor of School of Philosophy and Social Development, Shandong University.

Safe haven

Chinese people, particularly the younger generation, are embracing gold, with fewer fluctuations and lower risks, as a safe-haven investment.

Data from the Shanghai Gold Exchange show that the price for gold that is 99.99 percent pure or above closed at 479.59 yuan per gram at the end of December 2023, up 16.69 percent from the opening price at the beginning of 2023.

At an Agricultural Bank of China branch in Guizhou, a staff member was introducing the bank's gold products to a female customer born in the 1990s.

According to Xiong Xiong, a wealth consultant of the bank, since 2021, the sales volume of gold products in the Guizhou branch has increased significantly, with sales of about 27.5 million yuan in 2022 and about 62.9 million yuan in 2023, more than doubling.

In order to cater to the gold consumption trend of young people, at the end of 2023, the bank launched small-gram-weighted gold products, making them accessible even to those with limited budgets.

"Judging from the current market performance, the price of gold is relatively stable and may continue to rise. Buying gold now is a better investment channel," said Liu Lianghui, a customer at the gold shop in Jinan. Although he is only 23 years old and has just worked for more than a year, he already has a strong sense of financial management.

"There has been a structural shift in the consumption motivation for gold jewelry in recent years," Ding said, adding that the younger generation has a strong concept of investment and financial management and they turn to gold for its value preserving and low risk attributes, which boosts gold's popularity.

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