Gold traders welcome Chinese new year celebrations

It is the Year of the Dragon and the Chinese New Year was ushered in with great pomp and ceremony on January 23. Traditionally, the Chinese exchange little red envelopes containing valuable gifts. This year, many are set to include gold icons, especially dragons. Retailers say gold has risen 8% in the past three weeks to support this theory.

In a run up to the festival, sales reportedly jumped by over 50% in the first weekend in January from the previous year, with consumers rushing to stock up on the precious metal. Gold is bought for decorations and gifts for the New Year and Chinese demand has clearly helped boost prices given the massive increase in retail buying, say traders.

Retailers who have been tracking the market said dragon embossed gold bars and dragon figurines were particularly popular in the Asian country, with consumers preparing to welcome the year of the dragon under the Chinese zodiac sign. The dragon, especially the water dragon, is supposed to bring luck in wealth so gold has become a popular gifting icon this year in China.

“Gold is at a 6-week high in the international market, clearly boosted by the New Year celebrations in China. The symbol of the dragon this year will ensure hectic activity in bullion, way past the annual celebrations. Sometimes, astrology and an innate belief in tradition helps push demand,” said Ravibhai Sawant, manager at a bullion retail store in Zaveri Bazaar, who is also selling gold bars embossed with a dragon spitting fire in his Mumbai showroom.

“The Chinese New Year is one of the largest celebrations, along the same lines as Indian festivals and lots of gold is bought as presents. If one tracks the precious metal regularly, gold has fallen only twice in the past 10 sessions and has risen over 7% in January,” said another retailer.

A bullion analyst noted that the price of gold had dropped to $1540.90 at the end of December, but had managed to swing nearly $100 since the start of the year. “It is like Diwali celebrations in India. Before the onset of the festival, gold prices start moving Northward. By the time the actual date of the festival dawns, gold has climbed high enough. To avoid this, many consumers do their shopping at least two weeks before the festival starts,” he added.

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Posted by admin on Jan 25 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry