Monday, 28 December 2009

Gold Demand In China On The Rise

By Jack Wagon

Gold, being one of the most popular and precious metals in the world, has a number of different uses. With the passage of time, increase in the value of gold has continued with extra gusto in the present times, stamping its status as one of the metals with the highest demand in the world.

Gold holds much significance in the world economy. It is a very good and stable investment as compared to other metals. Due to this reason, the demand of gold is increasing day by day, and many countries, including china, have seen a surge in the demand for gold.

China is one of the fastest growing economies of the world. The past decade has seen an unprecedented growth in the Chinese market and their gross domestic product. It is predicted that in about seven years, China will surpass the United States in having the highest GDP. It is also the most populated country on earth. With the growth in economy, the living standards of the people have also improved. This has lead to rise in demand of luxury products, including gold.

The popularity of gold jewellery has been in attribution to symbolization of gold with wealth and prosperity. With the growing enhancement in living standards of the Chinese masses, there has also been an increase in the local Chinese demand for gold. The people are willing to pay huge prices for that, and with China having such a great population, this increase in demand hugely affects the international gold prices. To increase civilian gold reserves, the masses are being encouraged to invest in gold on part of the Chinese government as well as the press.

This rise in demand has encouraged many gold manufacturers to open up their business in China and target the growing Chinese market. Also, the rising gold prices have prompted many investors to start investing more money in gold as it is more stable and profitable. It protects the investors against a fall in the Dollar value, because the value of gold usually rises when the dollar depreciates.

It will take China only a few years in surpassing India as the country with the greatest demand of gold, according to expert predictions. This would not be surprising at all to see China emerging out ahead of India. However, the time factor of this happening is a matter of conflict. Some people are expecting China to accomplish that in ten years, while others are expecting it to do that within five years.

Most of the demand for gold is met with the gold produced within the country. China is amongst the largest gold producers in the world, and has increased its production in order to meet the local demand. But it is a point of concern, because gold reserves are not ever-lasting, and it may be a matter of time when the reserves are extinguished. This will lead to a shortage in supply, which will push gold prices even higher.

Gold demand by China is expected to continue to rise and put significant upward pressure on the gold prices in the world. We can be sure to see a strong correlation in the growth of Chinese economy and gold prices.

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