The World on Wednesday – Demand for gold in China

Last year China surpassed India as the top gold consumer in the world. With the price of gold at a three month low you would assume demand for gold would be going up, however according to traditional Chinese beliefs, 2010 is in a cycle of inauspicious years for marriage. Many couples are postponing their wedding plans as they believe that if a couple marry in specific years of that cycle, the husband or wife may die at a young age. This in turn reduces demand for gold as less jewellery would be bought before wedlock.

On the other hand, the year of the tiger is about to start in the traditional Chinese calendar, which has caused gold accessories featuring the big cat to become the most popular item on sale in the largest jewellery retailer in Beijing.

I think this article provides interesting and unusual examples of how price is not the only factor that influences demand. Students could draw supply and demand diagrams to help explain both situations.