From the beginning of the year to the end of May, gold sales (by volume) in China continue to grow at rates around 20%, after growing by 21.3% in 2010, to 571.5 tons. There is talk of sales to private individuals for jewelery use. But it is difficult to distinguish between purchases for investment and purchases for decoration. The latter are driven by the same reasons of refuge and speculation that move the price of the gold metal. The gift of a gold necklace becomes more attractive if it concerns a metal whose price continues to rise. While some of the motivations for buying gold as an investment asset are irrational (gold pays no interest or dividends and its attractiveness lies solely in capital gains that may prove to be ephemeral, as happened after the 1980 peaks) even here Chinese demand continues to support the price. And, given the prospects for continued growth of the economy and the scarce opportunities for diversifying investments offered to the Chinese, it is to be expected that they will continue to buy the yellow metal and therefore curb the prices.
http://www.chinadaily.com.cn/china/2011-06/24/content_12764412.htm
