China’s demand for gold exceeded 1,000 metric tonnes (1,102 short tons) for the first time in 2013, a 41 percent leap from 2012, the China Gold Association said.
The surge in gold consumption, fueled by a 28 percent slide in prices in early 2013, makes China the biggest gold consumer in the world. By contrast, demand dropped in India, the world's second biggest gold consumer.
China consumed 1,176.40 tonnes of gold last year, with jewelry demand climbing 43 percent to 716.50 tonnes, and bullion demand leaping 57 percent to 375.73 tonnes, according to statistics on China Gold Association's website.
"The sharply lower prices attracted a lot of Chinese consumers looking for bargains," Chen Min, an analyst at Jinrui Futures in Shenzhen said, according to the Economic Times. "Gold will continue to be an attractive investment in China in the near term as prices look steady near $1,200 an ounce.”
The demand surge was affectionately dubbed the "Granny Effect" in China, as middle-aged and elderly Chinese women, attracted by low prices, lined up outside gold shops both in mainland China and in Hong Kong to buy every piece of gold jewelry and bullion they could lay their hands on.
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Correspondingly, China’s production of gold rose as well, to 428.16 tons, a jump of 6.2 percent dwarfed by the country’s surge in demand. Even so, China remains the world’s biggest producer of gold for the seventh straight year.
The figures from the China Gold Association don't take into account demand from the Chinese central bank, whose reserves stand at 1,054 tonnes, unchanged since April 2009, according to the latest data on the central bank’s website. Market speculation suggests that the central bank may have been accumulating reserves and would soon announce a new figure, the Economic Times reported.