THE country’s economic recovery from the coronavirus pandemic may offer some solace to gold bulls, with expectations building that jewelry demand will rebound following last year’s wipe out.

Jewelry retailers on the Chinese mainland have reported strong sales in recent months, while concerns over infection have pushed some consumers online. It’s a turn around from last year’s Lunar New Year period, when surging virus cases forced stores to shorten business hours, and consumers reined in spending.

The shaky start to 2020 saw demand in the world’s biggest gold consumer tumble 35 percent to the lowest annual total since 2009, despite a rebound in the final three quarters.

Optimism about Lunar New Year sales has improved considerably, said Nikos Kavalis, managing director at consultancy Metals Focus. He’s confident sales “will be higher year on year, given the low base in 2020 due to the pandemic.”

Still, it will take some time for consumption to return to pre-pandemic levels. Demand may be about 30 percent lower than the same period in 2018 and 2019 due to the re-emergence of the virus in some provinces, said Haywood Cheung, president of the gold and silver exchange in Hong Kong.

“The Spring Festival is generally the peak season for gold jewelry sales, mainly because people want to bring gifts when visiting relatives and friends,” said Jason Yu, managing director at Kantar Worldpanel’s China division, a data and consulting company.

China’s demand may expand this year as policymakers have positioned domestic consumption as a priority, said Roland Wang, the World Gold Council’s managing director for China. That likely bodes well for gold demand, especially jewelry, he said.

Retailer Luk Fook Holdings International Ltd. saw year-on-year same store sales growth of 11 percent at self-operated shops for its gold products in the quarter ended Dec. 31. It saw a similar rise in its licensed shops, which account for about 96 percent of total shops on the mainland. E-commerce business sales growth jumped 53 percent.(SD-Agencies)