Chinese retailers are offering discounts on gold jewellery to attract customers ahead of the Lunar New Year, but prices are expected to rise after the holiday due to increased raw material costs.
As the Lunar New Year approaches, the demand for gold jewellery in China has surged due to its cultural significance as a traditional gift. Despite fluctuations in gold prices, positive market sentiment has encouraged retailers to provide small discounts to entice consumers, with prominent players like Chow Tai Fook Jewellery Group offering reduced prices per gram. This strategy aims to boost sales during the festive season, reflecting confidence in the market despite external price volatility.
The discounts being offered are tied to the daily spot gold price, demonstrating the careful pricing strategies employed by retailers to maintain competitiveness. Chow Tai Fook, recognized as the largest retailer by store count in China, has implemented an 80 yuan discount per gram for its gold items, likely influenced by the enthusiastic buying behavior of consumers gearing up for the celebrations. Such promotional tactics indicate a strategic response to both current consumer trends and the broader economic climate.
Looking ahead, there are indications that gold jewellery prices will rise following the Lunar New Year festival, attributed to increasing costs in gold and raw materials. Retailers are preparing to raise prices for several fixed-price products as a reaction to these rising costs, signalling a potentially tighter market post-festival. This move could influence consumer purchasing behavior and affect the overall jewellery market dynamics in China as investment banks maintain a bullish outlook for the sector.
