As we step into 2024, the global gold market finds itself in a whirlwind of volatility, experiencing significant fluctuations and gainsThis year has marked a striking ascent in the international gold price, soaring nearly 27% within the yearThe retail prices for gold jewelry in China have also continued to set new records, with pure gold pieces crossing the 820 yuan per gram threshold at one pointAmid ongoing economic uncertainties, heightened geopolitical tensions, and adjustments in monetary policies, the demand for gold as a safe-haven asset has demonstrated robust growthNotably, investment demand has played a vital role in propelling gold prices upwardLooking ahead to 2025, the gold market is anticipated to maintain a strong growth momentum, with demand expected to stay high, particularly in the segments of gold jewelry, investment bars, and gold ETFs

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However, there is also a sense of market segmentation taking shape.

The dramatic shifts in the gold market throughout 2024 have posed considerable challenges for consumer gold enterprisesAt the year's outset, international gold prices surged, climbing over $2000 per ounce, which in turn propelled prices for Chinese gold jewelry higherFor example, brands like Lao Miao Gold and Zhou Dashing saw their prices for pure gold jewelry begin the year around 650 yuan per gram, only to rise to 803 yuan per gram by year-endThis marked an approximate increase of 180 yuan per gram, setting a record high in recent yearsHowever, the enduring high prices have exerted pressure on the traditional retail market for gold jewelryRecent statistics reveal that nationwide gold consumption in 2024 dropped by 11.18% year-on-year, with demand for gold jewelry plunging by a staggering 27.53%. This trend illustrates a pronounced restraint in consumer purchasing power as gold prices climbed.

Consumers have grown increasingly price-sensitive, with many opting to reduce the weight of their purchases or leaning towards smaller gold jewelry pieces to manage their budgets more effectively

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Additionally, amongst price-sensitive consumer groups, the trend of "comparing prices" has become more prevalent, leading to a more rational approach towards brand and price selectionAs traditional gold jewelry sales lag behind previous years, enterprises in the gold sector are compelled to adjust their product designs and marketing strategies accordingly.

Despite the pressures faced by the gold jewelry market, the heat surrounding investment products such as gold bars and bullion has significantly increasedReports indicate a year-on-year sales growth of 27.14% for gold bars and coins in 2024, marking a bright spot in the gold market landscapeInvestment-oriented gold products are becoming ever more central to overall market demand, serving as a crucial support for gold enterprises navigating the sales pressures stemming from elevated gold prices.

One of the most notable highlights of the 2024 gold market has been the explosive growth in investment demand

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Gold ETFs (Exchange-Traded Funds) have emerged as a pivotal force in driving up the demand for goldBy the third quarter of 2024, net inflows into global gold ETFs reached 95 tons, marking the first positive quarterly demand growth since the first quarter of 2022. Off-exchange investment demand exhibited a nearly 100% year-on-year increase, with sharp rises in both ETF holdings and trading volumes in gold futures, solidifying gold's status as a hot investment product within capital markets.

Furthermore, the demand for gold from global central banks and physical gold remains robustParticularly in Asian countries and some parts of Europe, stakeholders are using gold reserves as a hedge against inflationary pressures and currency depreciationCountries like China, India, and Russia are continually increasing their gold reserves, further fueling market demand

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Additionally, with the decline in dollar interest rates and the global economic slowdown, gold's allure as a safe-haven asset is on the rise, suggesting ongoing support for the market.

Looking towards the price trajectory for gold in 2025, most industry experts predict an upward trend will continue, albeit with possible short-term fluctuationsThe ongoing cycle of interest rate reductions by global central banks is expected to be a primary driving force behind rising gold pricesFollowing the Federal Reserve's initiation of an interest rate reduction cycle in 2024, it is projected that an additional 50 basis points reduction will occur in 2025, providing a direct boost to the gold marketThe low-interest-rate environment in the United States will decrease the holding costs of gold, pushing investors toward this non-yielding asset.

On the supply side worldwide, despite gold mining companies ramping up production, a certain degree of tightness in supply remains, particularly as mineral resources in major gold-producing countries continue to dwindle

This limitation casts a shadow over the long-term growth potential for gold suppliesContrary to expectations, an excess in supply has not led to declining prices; rather, against the backdrop of global economic uncertainties and inflationary pressures, gold prices continue to show strength amid robust demand.

Moreover, the increase in gold market prices is not solely dictated by supply and demand dynamicsAccording to reports from the World Gold Council, global gold demand is influenced by various factors including macroeconomic policies and volatility in financial markets, indicating that the interplay of supply and demand is not the sole determinant of gold price fluctuationsMovements in gold prices are closely linked to the performance of the dollar, global economic growth rates, and risk appetites within financial markets

As a result, the anticipated global economic easing and inflationary pressures are likely to provide long-term support for gold prices.

How Will Consumer Gold Enterprises Navigate Sales Pressure?

In the face of persistently high gold prices, how Chinese retail gold brands respond to market challenges has become a focal point of industry attentionMany gold enterprises are ramping up cross-border expansion efforts, seeking fresh avenues for growth in international marketsFor instance, in the latter half of 2024, Chao Hong Ji entered Southeast Asian markets including Malaysia and Thailand, establishing new outlets that have reportedly exceeded sales expectations

This cross-border strategy not only mitigates sales risks in the Chinese market but also positions enterprises to benefit from rising gold demand in international markets.

Simultaneously, the personalization and customization services within the gold jewelry market have emerged as considerable breakthrough points for brandsIn light of soaring gold prices, consumers have become increasingly focused on the uniqueness of styles and personalized services in their gold jewelry purchasesBrands are attracting a younger generation of consumers through the provision of more diverse product choices and customization options, thereby establishing a stable source of profit for gold enterprises.

Gold enterprises are also enhancing their range of investment products, particularly in high-value items such as gold bars and coins, catering to the demand from investment-savvy consumers

By leveraging innovative product designs and flexible sales strategies, enterprises are further exploring the potential within the gold market.

The Future Outlook for the Gold Market Remains Positive

In summary, the gold market in 2025 is projected to maintain a robust demand trajectory, especially within the realm of investment productsGold ETFs and physical gold demand are anticipated to continue their strong growthDespite substantial price fluctuations, the uncertainties in the global economy combined with the cycle of interest rate reductions will consistently support the gold market, which is likely to remain in an elevated price range and could even see further increases