Gold Consumption in Asset Allocation Highlights Importance of Gold Prices
The recent surge in international gold futures and spot prices has drawn attention to the growing role of gold consumption in asset allocation. As gold prices have reached record highs, domestic gold consumption has continued to rise, with New York gold futures reaching up to US$2,152.3 per ounce and London spot gold hitting an intraday high of US$2,144.68 per ounce.
At the China (Shanghai) International Gold Investment Forum · Innovation 2023, industry insiders emphasized the increasing significance of gold in asset allocation amid major global changes. Factors such as the Federal Reserve’s monetary policy and the trend of the US dollar have contributed to the rise in gold prices, as well as the increased purchase of gold by global central banks, which has grown by 14% compared to the same period last year.
An Kai, global head of research at the World Gold Council, highlighted the doubling of gold purchase demand from global central banks and official institutions compared to its long-term average. This strong gold purchase demand is seen as an important structural change in the global gold market.
The rise in gold prices has also influenced the domestic gold consumer market, with the retail price of gold jewelry from many brands reaching as high as 630 yuan/gram. Zhang Yongtao, Secretary of the Party Committee, Vice President, and Secretary-General of the China Gold Association, noted the rapid growth and marketization of China’s gold trading market, with the cumulative unilateral trading volume on the Shanghai Gold Exchange increasing by 3.69% year-on-year.
The World Gold Council’s report on the gold investment demand of China’s high net worth individuals revealed that “preserving value” and “safety” have become key goals for wealth management, highlighting the stability-seeking mentality of investment. This supports a strong outlook for gold in the coming year, according to senior expert Cui Bin at PICC Asset Management, who expects the proportion of gold in asset allocation to increase, providing a smoothing effect on investment risk and return ratio.
Wang Lixin, CEO of the World Gold Council China, emphasized the importance of gold in global central bank reserves, institutional asset allocation, and household asset allocation amid rising geopolitical uncertainty and financial market risks. He advised investors to focus on the long-term value of gold in their investment portfolios rather than being swayed by short-term price fluctuations.
However, industry insiders caution that investment involves inherent risks, and investors should evaluate their strategies based on their risk preferences and capabilities.