High gold price slows gold demand in China – Commerzbank

The price of gold is again approaching its all-time high of $2,758 per troy ounce, notes Commerzbank raw materials analyst Carsten Fritsch.

Almost an all-time high again

“There is further evidence that the high price level is having a visible dampening effect on gold demand in China. According to the China Gold Association, Chinese gold demand in the first three quarters was down 11% year-on-year at 742 tons. Demand for jewelry suffered particularly badly, falling by 27.5% to 400 tons. In contrast, demand for bars and coins increased by 27% to 283 tonnes.”

“This reflects the demand for gold as a safe haven and store of value. However, this was far from enough to compensate for the weakness in price- and cyclical demand for jewelry. Bloomberg has calculated, based on available data, that demand fell 22% in the third quarter.”

“Here too, the decline in demand for jewelry was disproportionately high at 29%. In addition, demand for bars and coins was also 9% lower than in the previous year. “As a result, traditional demand for gold is currently providing headwinds rather than tailwinds, which is likely to limit further upside potential in gold prices.”