Generally, gold demand in China surges as the lunar new year approaches. This demand spike usually comes with a corresponding premium spike in China as supply at the Shanghai Gold Exchange vaults get dwindled down. The closer it is to Chinese New Year, the higher the premium, reaching dizzying heights of up to 65% higher than the annual average 6 weeks before Chinese New Year. 

Why, you ask?

Buying “something gold” has been a long-standing new year tradition for for the Chinese. This is in part due to gold being the metal symbolised emperors of the past in China, and that it also represents good luck or fortune. 

This is further exacerbated by the fact that many Chinese companies also give out bonuses at the year end, lining the pockets of many Chinese workers during this period. With fatter wallets, many Chinese feel richer and thus spend more during this period before the lunar new year.

Another reason for higher gold consumption is that some people, especially the elders, tend to give gold in red envelopes to their kids or grandkids during the Chinese New Year celebrations. This is another long-standing tradition of the Chinese. The red envelopes may not always contain gold though. It is more common to find them containing new bank notes. This is a way to symbolise giving good luck to the next generations.

As such, we at RT Bullion would also like to wish all our Chinese friends a happy and prosperous Chinese New Year! May luck favour you and your family this year of the rabbit! Huat Ar!

Sources: gold.org

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