* Gold consumption down 12.9% at 1,002.8 T in 2019 – association
* Sales of jewellery, gold bar and coins fall sharply
* Gold production down 5.2% at 380.2 T as resources deplete (Adds comments from analyst, China GDP data)
By Tom Daly
BEIJING, Jan 21 (Reuters) – China’s gold consumption fell for the first time in three years in 2019, figures released by its industry association showed on Tuesday, as high prices and an economic slowdown hit buying in the world’s biggest market for the metal.
China consumed 1,002.8 tonnes of gold in 2019, down 12.9% year-on-year, the China Gold Association said in a statement on its website.
The drop was due to downward pressure on the Chinese economy and rising prices for the metal in the second half of last year, the association said.
China’s economic growth cooled to its weakest in nearly 30 years in 2019 during a bruising trade war with the United States, data showed on Jan. 17.
Spot gold prices climbed by 18.3% in the same year as the trade stand-off led to policy easing by major central banks, reducing the opportunity cost of holding non-yielding bullion.
Prices are currently around $1,555 an ounce, after soaring to a near seven-year high of $1,610.90 earlier this month.
The high price “has led investors in solid gold to adopt a ‘wait and see’ stance, and sales of gold bars by key enterprises and commercial banks have also fallen sharply,” the association said.
Gold jewellery consumption in China was down 8.2% to 676.23 tonnes in 2019, while that of gold bars and coins tumbled by 27% to 225.8 tonnes.
“The Chinese economy is not getting better, thus spending sentiment has been souring,” said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.
“The jewellery sector continues shifting towards products carrying less gold content, because they are cheaper to consumers, have better designs, and offer higher profit margin to sellers.”
China, also the number one producer of mined gold, saw its domestic output of the metal fall last year by 5.2% to 380.2 tonnes, sliding for a third straight year as resources depleted. Raw material imports rose 6.6%, the association noted.
“The sharp reduction in production of domestic gold mines has resulted in tighter supply … and an increase in imported gold smelting raw materials, which have become an important supplement to China’s production,” it said. (Reporting by Tom Daly; Additional reporting by Arpan Varghese in Bengaluru; Editing by Himani Sarkar, Mark Potter and Jan Harvey)