In 2013, China’s consumption of gold increase by 41 percent, exceeding 1,000 tons for the first time, and making China the worlds leading consumer of gold. The increase in gold consumption was spurred on by the expectations that U.S. Federal Reserve will scale back its monetary stimulus, causing the drop in gold prices; the first time gold prices have fallen in the past 13 years and the largest annual drop since 1981. Chinese increase in gold consumption has helped to limit the decline in gold price.
China’s demand for gold is expected to remain high, at least for the short-term, as price appears to hover around $1,200 an ounce. More and more Chinese are looking to invest in gold to help preserve their wealth because of the under performing equity market. The last time the government announced a change to its gold reserves was in 2009 and there is some speculation that Chinese government purchased gold to increased it gold reserves during 2013.