Chinese consumers kept bargain-hunting for gold bars and jewelry in Guangzhou ahead of Sunday's Lantern Festival and after gold prices reached a nine-month low last week, Chinese media reported Sunday.
A customer surnamed Li bought 5 kilograms of investment-grade gold bars for 1.65 million yuan ($264,444), or about 330 yuan a gram, in a gold shop in Guangzhou Thursday, considering the deal to be a bargain compared with the 351 yuan per-gram price 15 days ago, the Guangzhou-based Nandu Daily reported Sunday.
On Friday, another customer bought 2.5 kilograms of gold for 830,000 yuan in the city, and many gold shops there witnessed long lines of enthusiastic buyers, the newspaper said.
Some parents even collected their children's Spring Festival red-envelope money in order to buy gold, a shop assistant at Guangzhou Jingxin Silver Co told the newspaper. "The parents wanted us to divide up the receipt for one purchase, so that they could send out a receipt to every child."
Spot gold with 99.99 percent purity closed down by 6.96 yuan a gram, or 2.13 percent, at 319.04 yuan a gram Thursday, the lowest since May 12, according to data from the Shanghai Gold Exchange.
The drop came after an overnight sell-off of gold in the US, following a US Federal Reserve suggestion of a possible halt to the quantitative easing program and market speculation that a hedge fund had been forced to liquidate positions across metals and oil markets, Reuters reported.
Dongbai department stores in Guangzhou sold 4.3 million and 4.82 million yuan worth of gold on Thursday and Friday respectively, and Guangdong Yuebao Gold Investment Co said its transaction volume during the two days was five times the usual volume, the newspaper reported.
Chinese people have a tradition of buying gold for children and senior relatives as gifts, but as an investment that holds its value, currently "buying gold is not as good as buying stocks," Deng Wenyi, a product manager in the wealth management department of Chengdu-based Huaxi Securities, told the Global Times Sunday.
"People should stop buying gold now, because the metal's technical chart is very negative. Also, the momentum behind the gold surge since 2008 was quantitative easing, and now there is a very strong expectation that the easing will come to an end," Deng said.
Meanwhile, the Chinese mainland stock market is deemed to have a much brighter prospect after the leadership change, given an anticipated economic recovery, and it has already risen over 20 percent in the past two months, she told the Global Times.
The China Securities Regulatory Commission issued a new regulation allowing exchange-trade funds of gold in January, which expands the channels for investors to buy the metal, the China Securities Journal reported Friday citing the regulator.
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