A customer tries gold jewelry at a store during the Mid-Autumn Festival holiday in Danzhai County, southwest China's Guizhou Province, Sept. 11, 2022. [Photo/Xinhua]

China's gold production has recovered to pre-pandemic levels as demand for the precious metal and jewelry jumped during the first quarter, with people seeking safe havens away from jittery financial markets, said an industry association on Tuesday.

China's gold output rose 6.92 percent in the first quarter to 114.87 metric tons, including some imports. Mined gold output in China, the world's largest gold-consuming country, rose 1.9 percent to 84.97 tons from the same period a year earlier, as capacity returned to pre-COVID-19 levels, the China Gold Association said on Tuesday.

Gold processed from imported raw materials rose 24.41 percent year-on-year to 29.9 tons over January-March, while consumption of the yellow metal grew 12.03 percent year-on-year to 291.58 tons in the quarter, it said.

The association added that gold jewelry consumption grew 12.29 percent year-on-year to 189.61 tons in the first quarter, while gold bar and gold coin demand increased 20.47 percent to 83.87 tons. However, gold use in industrial and other areas fell 16.9 percent to 18.1 tons.

With the gradual fading of the impact of the pandemic and the effective implementation of a series of pro-consumption policies, consumer willingness to spend has increased with the recovery trend of gold consumption, which was especially evident in February and March, when the growth rate of gold consumption increased significantly, it said.

The National Bureau of Statistics said retail sales of gold, silver and jewelry in March became the fastest-growing category among consumer goods. Due to increased demand for safe-haven assets, consumption of gold bars and coins also saw significant growth.

An analyst said the rise in demand for gold is partly due to investors fleeing risk after two banks collapsed in the United States and Credit Suisse in Europe had to be rescued.

"China's consumption of gold could pick up this year as the economy recovers and consumer confidence improves," said Zhu Yi, a senior analyst with metals and mining at Bloomberg Intelligence, a market monitor.

"Domestic producers have been lifting output of gold amid high gold prices to maximize margins."

For example, Zijin Mining, one of the largest gold producers in China, plans to raise its output of mined gold by 28 percent year-on-year to 72 tons in 2023 through technical upgrades, expansion of existing mines and commissioning of new projects, Zhu said.

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