Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
The Chinese New Year, the most important traditional festival in China, is also one of the strongest festivals of the year for gold consumption. And gold sales in China are expected to remain hot during the Chinese New Year of the Dragon in 2024. In addition to holiday and seasonal factors, there are some special reasons that differ from previous years.
China-based consultants at Metals Focus, an independent precious metals company, believe that gold sales this New Year are complicated by several unusual factors at play. The first is because the Chinese zodiac sign of the dragon has a great meaning, making more consumers willing to pay for gold jewellery related to the dragon.
Secondly, it’s because everyone is largely no longer affected by the epidemic for the Chinese New Year in 2024, which is still different from the past few years. At the end of 2022, Chinese authorities abandoned the epidemic prevention and control policies, somehow affected gold sales before Chinese New Year in 2023.
However, analysts note that gold sales still face certain headwinds, including China’s “tough economic situation”, gold prices at “historically high levels”, and competition for the jewellery’s appeal from travel, dining out and other recreational activities.
Rohit Savant, vice president of research at CPM Group, one of the world’s leading precious metals and commodities research firms, said the price of gold has held up well in 2023 despite repeated interest rate hikes and a hawkish stance by the Federal Reserve, which has been linked to strong demand from China.
Savant pointed out that in China, buying gold for the holidays is not only a popular trend, but also for hedging, as the price of gold has been rising. This is also in line with the public’s investment habit of buying up rather than down, especially when China’s stock and property markets are underperforming.
Furthermore, this year’s Valentine’s Day on 14 February falls during the Chinese New Year holiday, and there could be some overlapping demand to further boost gold consumption.
Savant also pointed to another unusual influence this year, the price on the Shanghai Gold Exchange (SGE). In previous years, gold sales have usually fallen off by the time we get closer to the Chinese Lunar New Year. But this year, the premium between the SGE price and the LBMA (London Bullion Market Association) price remained quite high, again indicating strong domestic demand in China.