The nation-wide shutdown in China due to the coronavirus outbreak shunned the gold buyers away from the malls, freezing the domestic bullion market. China is the world’s biggest gold consumer, per Bloomberg.
The market’s struggles in China may present a headwind for prices, which last month topped $1,700 an ounce for the first time in seven years. Last year, Chinese consumers accounted for about a fifth of total gold demand of 4,356 tons, according to the World Gold Council (WGC).
China’s retail sales of gold, silver and jewelry plunged 41% in the first two months of the year.
Zhang Yongtao, chief executive officer of the China Gold Association, said: “Domestic demand for gold will recover very slowly. Even after processors resume production, one major issue is that there are no orders.”
“Consumers won’t return to buy gold jewelry until the pandemic ends, and Chinese investors are also unwilling to purchase gold with their deposits at the moment,” he said.
Its worth noting that gold price premiums in China “have collapsed to negative levels not observed since the Great Financial Crisis,” as noted by Citigroup Inc. The bank also said that suggests jewelry consumption could hit lows not seen in a decade or more.
Gold rebounds towards 1600 mark
At the moment, gold prices extend the Asian rebound towards the 1600 mark amid a flight to safety on rising virus pandemic fears.
XAU/USD trades at session highs of 1593.70, as the bulls jump back on the bids.
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