China’s economic resurgence in 2023 was turbulent. As COVID-related restrictions were dropped at the end of 2022, a notable rebound in consumer spending and the return to normalcy in all industries fuelled China’s growth in early 2023. But the momentum didn’t last, as Q2 and Q3’s growth failed to meet market expectations.
A key factor behind 2023’s economic volatility was consumers’ reluctance to spend during most of the year. And combined with low consumer confidence, savings growth outpaced borrowings significantly for a second year running.
Meanwhile, other factors, such as the housing sector slowdown and the monetary policy divergence between China and other major markets, which led to a widening interest rate spread and weighed on the local currency, also impacted the nation’s growth.
Gold fared well in 2023. Supported by geopolitical risks, sizable central bank purchases – and intensifying expectations of major central banks lowering rates-gold, in US dollars, delivered a 14% return.
Gold withdrawals from the SGE totalled 1,687t in 2023, 7% higher y/y and 3% above the five-year average. Gold's eye-catching performance and strong local and global central bank purchases led to extensive coverage by local media. The local gold price’s outstanding performance drew their attention when the currency and other major assets weakened.
The Shanghai-London gold price premium rocketed during 2023. The premium reached an annual average of $29/oz, the highest in history. On a monthly average basis, September’s $75/oz was the largest. And the daily record was set on 14 September 2023, when the local gold price premium reached $121/oz.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
