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China passes US as world's second-biggest gold market
Last Updated(Beijing Time):2008-02-15 13:10

China surpassed the United States as the world's second-biggest retail gold market last year despite soaring prices.

Total consumer demand on the Chinese mainland, Hong Kong and Taiwan reached 363.3 tons, up 23.5 percent from a year ago, the World Gold Council said in a research report.

Gold demand, including jewelry and retail investment, on the mainland topped 326 tons, up 26 percent from 2006. It was the first time demand surpassed 300 tons. Gold jewelry demand reached 302 tons last year for year-on-year growth of 23.5 percent.

China's gold market stood out due to growing demand in the fourth quarter. Most other markets witnessed a demand drop in the fourth quarter as record high gold prices took a toll.

Gold prices hit a 30-year high and topped more than US$900 an ounce on concerns of inflation, geopolitical uncertainty, worries of a recession in the United States and a weak US dollar.

In the fourth quarter, gold demand rose 18 percent to 94.3 tons in China.

Demand in India, the world's biggest gold market, tumbled 64 percent to 83.9 tons in the same period while it decreased 15 percent to 110.7 tons in the US.

``It's a milestone for China's gold industry with demand surpassing 300 tons," said an industry veteran today.

Domestic inflation and volatile stock markets also add to its investment allure as a safe haven, industry veterans said.

China's gold demand is unlikely to be hit by soaring prices this year. Investors here tend to buy more on rising prices due to an expectation of higher prices, World Gold Council veterans said last month.

Chinese gold demand started rising in 2003. China's gold sales stood at 207.6 tons in 2003. Gold sales rise are in line with the country's economic performance.

China is expected to consume 600 tons of gold in 2010 with more people taking the precious metal as an investment vehicle, the industry forecasted earlier.

Source:Shanghai Daily 
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