Jewelry companies look to cash in on surging gold prices(3)

Unfaded luster

In April, 2013, Chinese consumers spent 100 billion yuan to buy 300 metric tons of gold over 10 days when gold prices plunged. Their big buying was a key factor in stabilizing gold prices that year.

Overall gold sales and investment demand are expected to remain at a healthy level in the coming quarters, said Wang from the World Gold Council of China.

However, there are growing concerns about a slowing in the sales of gold accessories due to seasonal factors and consumer uncertainty over global gold prices.

Wang, citing a council report, said: "The weak demand is likely to extend into the second quarter. As consumers' wait-and-see attitude carries on, gold jewelry sales will be under pressure in the second quarter, which is also a traditionally slow season in jewelry consumption."

"Such a situation, together with the fierce market competition, has put Chinese gold retailers under mounting pressure to stay profitable," Wang added.

Lu from Lao Feng Xiang said, "entering March and April, the market stagnancy spread as more people became hesitant about gold consumption".

Lin Zechao, general manager of Shanghai Jinchenghuang Industrial Group Co, said due to soaring raw material prices and uncertainties in the gold market, many consumers are postponing their purchases.

However, Wang said hard gold products are projected to continue to have a better-than-average performance, because they are lighter, priced lower and are more suitable for wearing in summer.

"Against the slip in jewelry demand volume, the combined values of the gold accessories purchased across China saw a 9 percent year-on-year increase to about 90 billion yuan, which is the second highest quarterly demand only after the second quarter of 2013," said Wang.

Liu, the close friend of Dai, believes the right time to buy gold jewelry is when prices are rising, not when they are falling.

"I used to buy gold accessories for our family members. The choices differed according to their taste," said Liu as she looked at butterfly and flower-shaped accessories in a Shanghai store.

"For my mother, I usually choose something simple and reserved, but for myself I focus on the better-looking ones."