BEIJING, Sept 15 (Reuters) – Chinese gold prices hit record highs this week, extending a months-long rally as consumers snap up the safe-haven asset to offset a depreciating yuan.
The most-traded December gold futures contract on the Shanghai Futures Exchange hit a record 463 yuan ($63.63) per gram in July and has since surged by another 3.6%, touching 480.26 yuan on Friday.
The eye-watering price comes as the yuan continues to lose value against the dollar and Beijing lowers deposit rates to boost the economy.
“Initially it was more to do with import restrictions in July, but now demand is picking up as well due to weakening CNY and low confidence in the economy,” said Soni Kumari, an analyst at ANZ bank.
China’s onshore yuan has depreciated 5% this year despite central bank measures to contain the slide.
Chinese authorities have asked the nation’s biggest banks to lower deposit rates to help boost the economy.
Lower deposit rates reduce enthusiasm for bank savings and push people to seek a better way to protect the value of their assets.
Spot gold prices are even higher, jumping above 600 yuan per gram this week, said sales staff in two different stores on Friday.
Tighter controls on U.S. dollar buying have also boosted gold, as has the National Day holiday in early October.
“Many jewellery shops are crowded with people who are crazy for gold jewellery,” said Michael Lee, director of a private jewellery company in Shenzhen. “I am so surprised that there is still so much buying interest at such a high price; it’s crazy.”
Gold consumption by the world’s top consumer of the precious metal rose by 16% year on year to 554.88 metric tons in the first half of the year, China Gold Association data showed.
Demand for gold jewellery, which accounts for about two thirds of total gold demand, rose nearly 15% while purchases of gold bars and coins jumped by more than 30%, the data showed.
($1 = 7.2767 Chinese yuan)