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Business / Economy

Small and simple is fine, but glitter remains key

By Wu Yiyao in Shanghai (China Daily) Updated: 2015-02-18 08:09

Small and simple is fine, but glitter remains key

Women check gold bars at a department store in Beijing. Gold jewelry prices haven been rising since the start of this year. [Provided to China Daily]

Traders say demand for precious metals on the rise as nation's annual retail rush takes shape

Spring Festival is normally a glittering season for gold traders and dealers, but this year is less heated than previous ones, with market insiders saying consumers are favoring simpler designs and smaller, inevitably cheaper, products.

"As Chinese new year falls in February, we have had more time to prepare for the surge - but for sure, smaller, simpler items are going fast," said Liu Caifeng, the manager of Yayi Jewelry Co Ltd in Shanghai's Yu Garden, one of the city's shopping hubs for gold jewelry.

The price of gold climbed to a five-month high of $1,306.2 per ounce in mid January, or 262.5 yuan ($42) per gram.

In some jewelry stores in Shanghai, the precious metal's price is about 330 yuan per gram, about 10 higher than the physical price after factoring in the craftsmens' costs.

A year ago, some stores were mobbed with buyers looking for a bargain after the price of gold took an unexpected tumble, which effectively absorbed what turned out to be a year's worth of consumption.

Sales do normally rise at this time of year because giving gold is a tradition during Spring Festival, with price often barely a consideration.

Rings, necklaces and bracelets are among the most popular items, as they can serve as gifts to all kinds of people, but the most popular recipients are younger people getting married and newborn babies.

"Giving gold jewelry as gifts is a tradition in Chinese culture," Sun Lizhi, a 72-year-old Shanghai resident, said.

"I have already sent three sets of gold rings to my grandchildren as wedding gifts, and my first great grandchild is about to be born."

Small and simple is fine, but glitter remains key

Sun has just chosen a gold bracelet for her great-grandchild, who is due this month.

"In the past, I would have chosen something with complicated patterns such as a phoenix or a peony flower. But young people have their own tastes these days, so I chose simple designs to play safe. Giving gold items are not just about giving your best wishes but also passing on wealth."

For the lucky recipients, gifts of the glittering metal themselves are now good enough, without too much carving or shaping.

"Gold items are valuable and they last forever. I can put one in my safe, or turn it into cash if I really need money in an emergency," Xu Yifan, 26-year-old office worker in Shanghai, said.

In the past, gold was often common on items, such as paperweights, sculptures or vases, but sellers say the demand is falling.

"In the past, gold statues of an auspicious animal such as a tiger or an elephant were quite popular, even though they might cost at least 30,000 yuan," said Cao Yuanyuan, a shop assistant at Shanghai's China Gold Co Ltd.

"But this year that kind of gold craftsmanship is proving less popular because consumers are less keen to flaunt their wealth by putting gold items on show in their sitting room or office."

Smaller items such as miniature kittens or puppies, Cao said, are replacing the more traditional larger animals on China Gold's "best-seller" list.

As 2015 is the Year of the Sheep, many gold jewelry brands have introduced sheep-themed products.

Hong Kong-based Chow Sang Sang Holdings, for instance, has developed a gold pendant in the shape of a sheep, while Shanghai-based Lao Feng Xiang has introduced a gold stamp celebrating the animal.

The makers said both designs, have attracted young buyers particularly, who despite normally preferring diamonds and crystals, were snapping up the sheep-themed items as lucky charms.

"Wearing a gold necklace or a pair of golden earrings is something my aunts or grandma would do," Zhang Qi, 20-year-old college student in Shanghai, said.

"Young people like me prefer crystal ear studs or diamond rings, however gold is always considered a lucky item to wear so I have this tiny gold locket attached to my purse, and I am hoping that it will bring me good fortune in the new year."

Gold items sold by banks have proved popular too.

Guo Kaiming, 56-year old, said he had just spent around 120,000 yuan buying gold coins and banknotes at a branch of Shanghai Pudong Development Bank.

The notes, made of gold foil in the pattern of a banknote, are especially popular among investors, not only as gifts by also an investment, Chen Chen, a wealth manager at the bank, said.

Analysts are predicting that this year's modest consumer habits will have an impact on the gold market, especially in Asia.

The falling sales of lavish gold jewelry is no surprise to Albert Cheng, managing director for the Far East at the World Gold Council, who is already calling this year's trends a natural market correction after the over-zealous demand of previous years.

The gold price kept rising last month. In Shanghai, selling premiums were about 20 yuan an ounce by the end of January, about 45 yuan higher than the global benchmark.

Alex Thorndike, senior precious metals dealer at MKS Group, told Reuters that he thought seasonal demand in China into the new year is likely to serve as a cushion against any downside swings in the global market.

Liu Feng, senior vice-president and analyst with CreditEase, a credit and wealth management services provider, predicted that investors looking to earn from gold this year can expect the price to fluctuate between $1,100 and $1,350 per ounce over the coming 12 months.

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