In China today, many identify with Huang’s consumption mentality, with domestic gold prices reaching new highs last year, and the retail market witnessing a gold rush.
And as China’s stock market struggles to recover, denting investor expectations, consumers with limited access to overseas investment products have turned to gold as a safe-haven investment, even though purchasing bars or jewellery at retail outlets would incur extra processing fees.
The retail gold buying spree is particularly seen in lower-tier cities and less affluent counties, said Fred Qu, a business development manager of a jewellery brand focusing on the east China market.
And with houses in smaller cities and counties not selling well and experiencing a significant decline in prices, gold has been favoured by young people despite its soaring cost, he added.
The annual consumption level of gold jewellery per capita in third-tier cities and below increased from 460.7 yuan (US$65) in 2017 to 617.5 yuan in 2022, with a compound annual growth rate of 6 per cent, according to state broadcaster CCTV.
The growth rate surpassed the increase seen in first- and second-tier cities, as well as the national average level, the channel added.
During the global economic downturn, gold, with its strong wealth preservation characteristics tends to be valued by more investors, said EqualOcean analyst Zhuang Jinglun.
According to the National Bureau of Statistics, from January to November last year, retail sales of gold and silver jewellery increased by 11.9 per cent, year on year, surpassing overall retail sales of consumer goods, which grew by just 7.2 per cent.
In recent years, jewellery businesses recognising the purchasing power of the lower-tier markets ramped up their investment in third- and fourth-tier cities.
Along a street less than 200 metres (656 feet) long in Quzhou, a prefecture-level city in the eastern province of Zhejiang, most of the 15 gold jewellery stores have opened in the past two to three years, CCTV reported.
According to Chow Tai Fook’s interim report for April to September, the expansion into lower-tier cities aligns with its overall brand strategy.
As of the end of September, the distribution of its point-of-sale locations in China had increased to 7,699 from 3,835 in March 2020.
Of all its locations, 45.5 per cent were located in third and fourth-tier cities and below, up from 33.3 per cent in March 2017.
“Gold jewellery and products continued to be buoyed by consumers, despite the strength in gold price,” the report said.
From April to September, its revenue from gold jewellery and products increased by 12.8 per cent, the report added.
In contrast, as a weak macro environment weighed on discretionary purchases, revenues for gem-set, platinum and k-gold jewellery had declined by 18 per cent during the same period, it added.
Gold also has a well-established recycling mechanism, while diamonds face difficulties and have a high depreciation rate, EqualOcean analyst Zhuang added.
And amid the current sociocultural shift, there is a waning belief in the myth that diamonds are forever, resulting in a noticeable decline in demand for diamonds, Zhuang said.
The improvement in the craftsmanship and the more exquisite design of gold jewellery influenced primary school teacher Huang, she added, along with the high price of diamonds.
Due to the approaching Lunar New Year, many young people are returning home for blind dates and to get married, resulting in a high demand for gold jewellery, with many designs focusing on wedding and marriage themes, added jewellery brand manager Qu.
“At the end of the year, those who buy gold jewellery mainly focus on pieces with larger weights,” he said, pointing to gold bracelets and necklaces.
In mid-September, the retail price for gold from main brands, including Chow Tai Fook and Chow Sang Sang, had risen to 600 yuan (US$84) per gram before peaking at around 630 yuan per gram around the beginning and end of December.
The price declined slightly in the last two days of 2023, but it has fluctuated around 625 yuan per gram since the beginning of the new year.