China News Service, Beijing, February 27 (Reporter Liu Yuying) During the 2024 Spring Festival, gold consumption in China is booming. Gold jewelry, Year of the Dragon gold bars, gold coins, transfer beads, etc. are favored, and gold consumption has become a fashion.

  Today, gold jewelry is no longer synonymous with "tacky" in China.

Various gold jewelry of small weight and new styles as well as small golden beans with the function of saving money have entered the field of public consumption, making gold a "favorite" for many people.

  Statistics from the China Gold Association show that in 2023, national gold consumption will be 1,089.69 tons, an increase of 8.78% compared with the same period in 2022.

Among them: 706.48 tons of gold jewelry, a year-on-year increase of 7.97%; 299.60 tons of gold bars and gold coins, a year-on-year increase of 15.70%.

  Liu Yuning, a senior gold analyst and visiting professor at China University of Geosciences, said that the reason for the current "gold consumption boom" is that consumers hope to maintain and increase the value of their assets by increasing investment options when investment channels in the property market and stock market have narrowed.

  Research institutions generally believe that factors such as the warming geopolitical situation in 2023, large-scale gold purchases by global central banks, and increased expectations of major central banks cutting interest rates are the main reasons for the high fluctuations in international gold prices.

  At the end of December 2023, the year-end spot gold price in London was US$2,062.40 per ounce, an increase of 12.39% from the opening price at the beginning of 2023, and the annual average price was US$1,940.54 per ounce, an increase of 7.80% from the average price of the previous year.

  The latest "Global Gold Demand Trend Report" released by the World Gold Council states that taking into account gold demand from the over-the-counter market and other sources, gold demand in 2023 will rise to 4,899 tons, setting a new historical record.

  Liu Yuning said that the U.S. dollar is in an interest rate hike cycle in 2023, but the price of gold has risen instead. This performance is unusual.

One of the important factors is that global geopolitical conflicts will continue in 2023, which will push up the price of gold.

In particular, the Palestinian-Israeli conflict in October last year caused the price of gold to return to US$2,000 per ounce and hit a record high of US$2,146.

  In addition, from October 2022 to May 2023, the U.S. dollar was in an interest rate hike cycle, but the market expected that the Federal Reserve would stop raising interest rates in May 2023, so gold went on an upward trend before May.

  The safe-haven function of gold is also one of the reasons why international gold prices have risen continuously since 2023.

Data from the World Gold Council shows that for the whole of 2023, global central bank gold purchase demand reached 1,037 tons, reaching the second highest level in history, a decrease of only 45 tons compared with 2022, which has strongly boosted gold demand.

  Entering 2024, the international gold price has entered a wave of oscillation and downward trend.

This is mainly due to the fact that the U.S. Consumer Price Index (CPI) cooled less than expected in January and interest rate hike expectations weakened, causing spot gold to fall below $2,000 per ounce.

  In China, January was just before the Spring Festival holiday, and domestic demand for gold surged. This, coupled with the reduction in gold imports in recent months, led to a tighter supply and demand relationship, which caused a firm domestic gold price and formed a premium.

  Regarding the global gold price trend in 2024, analysts believe that expectations of interest rate cuts by the Federal Reserve, general elections in many countries, and geopolitical situations will all have an impact on gold prices.

  Among them, whether the Federal Reserve cuts interest rates is the most critical factor.

The minutes of the Federal Reserve’s recently released meeting at the end of January 2024 showed that it would not be appropriate to cut interest rates before becoming more confident that inflation will continue to move towards 2%.

  At present, expectations of interest rate cuts by the Federal Reserve continue to cool down, which will suppress gold prices in the short term.

Capitallight Research, a Canada-based research organization, believes that it is only a matter of time before the Federal Reserve abandons its inflation target and cuts interest rates to support the economy.

This shift in monetary policy will drive up investment demand for gold.

  In addition, global economic and political conflicts are still fermenting, and the rising tensions in the Middle East have limited the further decline of gold prices, and the safe-haven properties of gold will be enhanced.

  Liang Yonghui, deputy general manager of Shandong Zhaojin Gold and Silver Refining Co., Ltd., believes that before the U.S. economic recession in history, the U.S. 3-month and 10-year Treasury bond interest rates have inverted. The current degree of U.S. Treasury bond inversion is the highest in history, and recession risk expectations are high. , supporting future strength in gold prices.

  Liang Yonghui believes that there is downward pressure on gold prices in the short term, but in the long term, against the background of excessive currency issuance, increasing geopolitical risks, and expectations of interest rate cuts, there is no basis for a sharp decline in gold prices.