The photo shows an employee displaying a gold abacus at a jewelry shop in Jinan, the capital of East China's Shandong Province. (Photo/Xinhua)

Chongqing - As the new year begins and the Spring Festival approaches, the gold market is seeing a rise in investment interest.

Over the past year, gold prices have soared, with a nearly 30 percent increase year-on-year. However, gold jewelry consumption has remained sluggish.

According to a financial media outlet Yicai report, as the year wraps up and the new year begins, major gold stores have launched discount campaigns. For example, Chow Tai Fook is offering a 3 percent discount for online gold purchases, while some brands are providing a 100 yuan ($13.7) discount per gram.

Currently, the trading price of the gold traded on the Shanghai Gold Exchange is 616.26 yuan per gram, while gold at stores such as Chow Tai Fook and Lao Feng Xiang is priced around 800 yuan per gram, a significant premium compared to the trading price, in addition to processing fees. This has placed some pressure on consumer demand, as Yicai reported.

However, the expectation of rising gold prices remains strong, and retailers are hopeful for a strong performance during the Spring Festival.

Chen Zhijun, Head of Industry Expansion and Marketing for the World Gold Council in China, told Yicai that many retailers are increasing the availability of small-weight products in response to high gold prices in 2024. However, the demand for gold as a store of value, combined with the high prices, has led to a rise in investment interest. In the future, marketing strategies, product innovation, and capturing the preferences of younger consumers will remain key factors.

According to data from the World Gold Council, in the third quarter of 2024, global ETF funds saw a net inflow of 94.6 tons, ending a nine-quarter streak of outflows. Total holdings rose to 3,200 tons. Meanwhile, global gold jewelry consumption dropped by 12 percent year-on-year, totaling 459 tons. In the Chinese market, gold jewelry demand was 103 tons, rebounding by 19 percent compared to the previous quarter. However, due to the combined impact of gold prices and economic factors, gold jewelry consumption decreased by 34 percent compared to the same period last year and was 36 percent below the 10-year average.

According to Xinhua Finance, most research institutions remain optimistic about the future of the gold market. These institutions believe that the factors supporting the gold market in 2025 are still numerous.

On one hand, investors face considerable uncertainty, with geopolitical instability and the uncertain pace of economic recovery. On the other hand, the diversification of global central bank reserves will continue, and the trend of major central banks increasing their gold reserves is unlikely to reverse. Furthermore, central banks around the world are highly likely to continue cutting interest rates, and historically, the gold market has performed well during periods of rate cuts.

Xiaoxiang Morning Herald cited Wang Youxin, a senior researcher at the Bank of China Research Institute, as saying that gold prices are expected to continue rising in 2025. However, compared to the strong surge in 2024, volatility will increase significantly, and gold prices will likely show a pattern of range-bound fluctuations and gradual upward movement. After November 2024, factors such as rising inflation pressures, the U.S. Federal Reserve's shift towards a more hawkish stance, and a stronger U.S. dollar have suppressed gold’s performance, leading to increased volatility. These factors are expected to continue influencing gold price movements in 2025.