Gold is a beloved metal in many parts of the world. Some use it as a way to store wealth. Some use it to hedge against uncertain economic times. Some use it to show off their wealth and status. However, there is a consensus that gold has intrinsic value and will continue to have value in the far future. Various countries have historic ties to gold, but arguably, none as large as those in the Asian continent. The largest gold consumers in the world are India and China, respectively, each with their own cultures and differences on what type of gold they like to invest in. How do Chinese consumers view gold? 

China’s deep cultural entwinement with Gold

Chinese investors bought 291 tonnes of gold in the first quarter of 2023, a staggering 12.03% increase from the year prior. Demand for gold has never been higher in China. Demand for investment gold in China surged 28% and the demand for gold jewellery has risen by 10%. In recent years, it’s been a toss-up between China and India on who consumes the most gold. With their combined population reaching almost 3 billion people, together, China and India accounted for more than half of the global gold consumption in 2023. In 2024, China ranked first for general gold consumption, while India ranked first for the world’s largest consumer of gold jewellery. Due to a deep cultural history intertwined with gold and the current bleak outlook of China’s economy, the Chinese population has been buying more gold than ever. Gold is associated with power, wealth, longevity and happiness. It’s one of the most valuable and significant gifts you can receive on birthdays, weddings, Lunar New Year and other important holidays. 

Gold’s rising popularity among Gen Z

Lately, gold’s popularity has been on the rise amongst the younger generations in China. Gen Z love to buy and invest in small pieces of gold and gold jewellery. With the rising uncertainty among upcoming generations about their future, consumption patterns have changed. Younger generations are more cautious and practical about their consumption habits, bringing gold to the forefront of demand as one of the safest assets to invest in. Because of current geopolitical and economic tensions, Chinese consumers’ confidence in traditional investments such as real estate and stocks has faltered. China’s real estate sector, one of the cornerstone assets for Chinese investors to support, remains in crisis. In 2021, Evergrande, one of the biggest real estate developers in China, collapsed amidst cash-flow and debt issues. Homes were left half-finished, and buyers were left shouldering debts for the next 30 years. The common perception of property as a safe investment has shattered for Chinese investors, and now investing in housing is considered a risky investment among the youth. Amid the lacklustre appeal of traditional investment alleys, the allure of gold shines through. Gold has skyrocketed in price in response to geopolitical tensions such as Russia’s invasion of Ukraine and the war in Gaza. Young Chinese investors are interested in buying gold, and they turn to gold beans as an affordable investment option. As an alternative option to gold bars or coins, which can be expensive and unaffordable to youth who do not have as much spending power, buying pill-sized gold beans, weighing around a gram, is a much more cost-effective option to secure their future. 

Central banks’ role in raising demand

In 2023, the Chinese central bank bought more gold than any other central bank in the world, adding around $63.5 billion worth of gold to its reserves, more in that year than it had in the past 50 years. Central banks in China are buying gold to diversify their reserves and to reduce China’s dependence on the United States. The American dollar used to be considered the most important currency to hold in reserve, but many central banks contested that fact after the US Treasury Department froze Russia’s reserves after sanctions were imposed on Moscow when the country declared war on Ukraine. The move by the US Treasury shook the trust that countries had in the current international monetary system based on the US dollar. Many central banks moved to protect what they had in reserves by diversifying their holdings with gold. Chinese central banks used the USD they had in reserve and replaced it with gold, adding to their gold reserves while whittling away their US debt. 

China’s gold mania has impacted gold prices in a major way. China’s increase in gold consumption has driven up gold prices drastically. To secure their future, Chinese youth are flocking to gold. Concerns surrounding the real estate market and the stock market are not making young investors optimistic about traditional routes of investing, creating a large demand for gold. Furthermore, central banks reducing their dependency on the US has driven many to replace their US debt with gold instead, further driving up gold consumption. Gold's future is bright. With high demand and increasing value, gold mania is not letting up anytime soon!