China's gold demand tops 1,000 tonne for first time

Sharp slide in prices helped attract buyers for jewellery and bullion

China's gold consumption jumped 41% in 2013 to exceed 1,000 tonne for the first time, an industry body said on Monday, as a sharp slide in prices attracted buyers for jewellery and bullion.

The demand surge has helped China become the No. 1 gold consumer and should support prices, which took a hit last year from expectations of a tapering of commodities-friendly economic stimulus by the US Federal Reserve and a drop in demand in the other major buyer India.

Gold consumption in China grew to 1,176.40 tonne last year, with jewellery demand climbing 43% to 716.50 tonne and bullion demand soaring 57% to 375.73 tonne, the China Gold Association said on its website.

Chinese demand hit a record as gold prices fell for the first time in 13 years amid an improving global economy and a rally in equities. Prices tumbled 28% in 2013.

"The sharply lower prices attracted a lot of Chinese consumers looking for bargains," said Chen Min, an analyst at Jinrui Futures in Shenzhen.

"Gold will continue to be an attractive investment in China in the near term as prices look steady near $1,200 an ounce," Chen said.

Data last month showed that China's 2013 gold imports from Hong Kong more than doubled from the previous year to reach a record 1,158.162 tonne.

Data from the industry association also showed that China's gold output in 2013 rose 6.2% from the previous year to a record high 428.163 tonne, making the country the world's biggest producer for a seventh straight year.

China's gold consumption figures do not include demand from the central bank, whose gold reserves stand at 33.89 million ounces (1,054 tonnes), unchanged since April 2009, according to the latest figures on the central bank's website.

China last announced a rise in its gold reserves in April 2009 and has not revised the figure since, though there had been recent market speculation that the bank had been accumulating gold reserves and would announce a new figure.

China's foreign exchange reserves, the world's largest, rose to $3.82 trillion at the end of 2013.