An increase in gold sales over the Spring Festival holiday week demonstrates continued consumer confidence in gold, out of inflation fears.
The yellow stuff is a popular gift item instead of cash-filled red envelopes during the lunar New Year holiday.
"Sales volume of gold jewelry and collectibles, especially gold bars issued for the Year of the Rabbit , was much larger during the holiday week," Liu Yan, a sales woman with Chow Tai Fook Jewelry Co, a popular jewelry retailer in China, at New World Department Store in Beijing, told the Global Times.
A customer surnamed Zhou spent around 3,600 yuan ($549.28) for a 10.01-gram (0.322 ounce) gold bar with a rabbit motif at the store. "I will give the gold bar to my grandson as a New Year's gift," Zhou said.
Customers also queued in front of counters at Beijing Caibai, a popular jewelry department store, during the holiday.
Gold sales at Beijing Caibai increased tremendously during the holiday, Niu Jingqi, a manager of sales and strategic department with Beijing Caibai, told the Global Times late Tuesday. With final sales numbers yet to be tallied, Niu remained optimistic.
Analysts said pressures of inflation boosted Chinese investors' demands for gold as a safe haven.
"Chinese consumers have become much more sensitive to inflation, and (purchasing) gold could be an effective measure to hedge inflation," Liu Yangyi, head of the trading department at China National Pearl Diamond Gem & Jewelry Import & Export Corp, said Tuesday.
The Consumer Price Index, a key measure of inflation, is expected to hit 5 percent in the first quarter of 2011, predicts a report filed with the State Information Center, a government think tank affiliated to the National Development and Reform Commission.
China's gold output in 2010 totaled 341 tons, up 8.57 percent over the previous year, according to the latest data filed with the China Gold Association.
Increases in gold output will help the country hedge against financial risks and inflation, and also maintain economic security, the association said prior to the Spring Festival.
The average gold price in the international market in 2010 was $1224.53 per ounce, 25.6 percent higher than in 2009, according to the China Gold Association.
"Gold prices will probably increase 5 percent in the first quarter this year, with an average increase of 10 percent this year," Liu predicted.
