Gold Consumption Trends: Insights from China and UAE

China's central bank has adjusted its gold purchasing activity at the onset of 2024, signaling a potential shift in its approach. World Gold Council revealed that the People's Bank of China acquired 10 tonnes of gold in January, marking the 15th consecutive month of increased official gold reserves. However, this figure is half the average monthly purchases observed since the central bank commenced its buying spree in November 2022. While there was a slowdown in purchases, experts anticipate that China may surpass its previous buying streak from almost eight years ago.

The gold market is closely monitoring consumer behavior in China as the nation celebrates Chinese New Year, a period traditionally associated with increased gold purchases. 

Interestingly, in 2023, gold consumption in China exceeded 1000 tons, with a notable year-over-year increase of around 9%. Sales of gold jewelry rose by 8%, while demand for gold bars and coins surged by over 15%.

This increased demand for gold bars and coins indicates a growing preference among consumers for investment-grade gold.

Meanwhile, in the UAE, consumer preferences in 2023 showed a notable shift towards gold coins and bullion over traditional jewelry purchases. Data from the World Gold Council indicated a 34% increase in demand for bars and coins, reaching 11.2 tonnes, while jewelry demand declined by 15% to 39.8 tonnes. This trend propelled total gold demand in the UAE to 50.9 tonnes, marking a 10-year high.

The Emirates experienced consistent growth in coin and bar purchases, driven by safe-haven motives, particularly evident in the fourth quarter. However, the rising prices of gold tempered some investors' enthusiasm, as they awaited potential corrections in the market.

Overall, the shift in consumer preferences towards gold coins and bullion in both China and the UAE underscores the growing importance of investment-grade gold in today's uncertain economic landscape. As geopolitical tensions and market volatility persist, investors are likely to continue seeking refuge in tangible assets like gold, driving demand for gold bullion coins and bars.