The World Gold Council has forecast a continued surge in gold investment demand in China albeit at a moderated pace this year, following strong investment growth of coins and bars in 2024.

Factors contributing to the possible growth include fluctuations of other assets' performances — like the stock market, the high investment returns of gold last year, continued interest rate declines and the central bank's gold buying, all buoying investor sentiment.

Wang Lixin, regional CEO of WGC (China), said, "With domestic interest rate drops potentially exceeding our projections and possible renminbi fluctuations, we anticipate increased demand for gold investment in China."

Wang said the renminbi may face pressure from the widening gap between Chinese and US interest rates due to reduced expectations of further rate cuts by the US Federal Reserve and potential increases in US trade tariffs. In this context, investor demand for risk-hedging is expected to continue driving their purchases of gold as a safe-haven asset.

"If China's central bank continues to increase its gold holdings this year, the sentiment toward gold investment may further heat up. However, if other assets such as stocks show improvement, investors' preference for gold may decrease," he said.

Rising gold prices could also potentially provide support for investors looking to purchase gold. Previously, Sharon Ding, head of China basic materials at UBS, predicted that gold prices may reach $3,000 per ounce in 2025, influenced by the rate-cutting cycle initiated by the US Federal Reserve and major central banks, along with ongoing geopolitical risks.

Amid 38 record-breaking spikes and a 28 percent surge in renminbi-denominated gold prices in 2024, China's gold investment demand soared past prior levels.

The country's total demand for gold coins and bars hit 336 metric tons in 2024, up 20 percent from 2023, marking the most robust annual showing since 2013.Demand for gold exchange-traded funds in the Chinese market also surged, with total inflows reaching around 31 billion yuan ($4.24 billion). This made 2024 the strongest year for Chinese gold ETF demand, with total assets under management reaching 71 billion yuan, soaring 150 percent during the year and setting a new historical high, according to the WGC.

"Heightened volatility in the bond and stock markets has led more investors to turn their attention toward gold-related assets last year. Additionally, fluctuations in the renminbi exchange rate have further stimulated investors' risk-hedging demand, prompting them to purchase gold. The trend of China's central bank's gold purchases in 2024 has further boosted sentiment toward gold investment," Wang explained.

Amid high gold prices, the demand for gold jewelry exhibited contrasting performance. Total demand for gold jewelry in the Chinese market in 2024 amounted to 479 tons, a 24 percent decrease from 2023, WGC said.

"Nevertheless, it is worth noting that although consumers reduced the weight of the gold jewelry they purchased, their overall budget did not decrease significantly. The total value for gold jewelry purchased in the domestic market last year was 261.5 billion yuan, a slight 7 percent decrease year-on-year, ranking as the third-highest historically," Wang noted.

Deng Ronghua, general manager of Chow Tai King Jewelry, concurred. He mentioned that his company is targeting customers in fourth- and fifth-tier cities. This year, they opened 150 new franchised stores, with 30 of them being managed entirely by newcomers to the industry.

In addition to showing high potential in lower-tier markets, luxury gold products have also displayed remarkable resilience.

Investment bank China International Capital Corp Ltd said in a recent report that while the rapid rise in gold prices affected mainstream jewelry sales last year, sales of high-end gold products remained resilient. For example, Laopu Gold Co Ltd's revenue is estimated to have surged by 136 percent year-on-year to 7.5 billion yuan in 2024, with net profit increasing by 187 percent to 1.2 billion yuan.

However, it is important to note that leading jewelry stores, which occupy a significant share of the market, have still been significantly impacted by high gold prices. Leading jewelry enterprise Chow Tai Fook reported a 44.4 percent year-on-year drop in net profits to HK$2.53 billion ($324.72 million) in its interim results, with a reduction of 239 retail outlets to 6,968 during the reporting period (April to September). Similarly, Chow Sang Sang, Lukfook Jewellery and Lao Feng Xiang experienced varying degrees of profit declines.