As the Lunar New Year approaches, a notable surge in gold sales is expected, marking a traditional peak season for the precious metalVarious gold retailers across China have initiated promotional campaigns aimed at enticing consumers to purchase gold jewelryReports indicate that on January 10, renowned brands such as Chow Tai Fook, Chow Sang Sang, and Lao Miao Gold have set retail prices exceeding 800 RMB per gramMeanwhile, discounts range from 40 to 70 RMB per gram, alongside promotions such as buying gold to receive silver, and labor costs reduced to 80% off.

However, the steep pricing has led to a tempered purchasing enthusiasm among consumersWhile there is a strong desire to acquire gold, many are adopting a wait-and-see approach, anticipating a potential decrease in gold pricesA staff member from a gold shop near Shanghai’s Bund remarked, “The prices are still on the high side; customers are eager to see if there will be even greater discounts during the Spring Festival.” Notably, interest is gravitating towards zodiac-themed gold accessories this year, and there has been an increase in the availability of lighter and more affordable gold jewelry, which could potentially boost consumption in this sector.

The gold jewelry market is grappling with considerable sales pressure

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In 2024, international gold prices saw significant increases, hitting historic highs and accumulating an annual rise of nearly 30%. Consequently, retail prices for gold jewelry in China have mirrored this ascent, jumping from around 500 RMB to over 800 RMB per gram by the year's conclusion.

This sharp increase in pricing has placed gold jewelry stocks under strain, with both share prices and performance sufferingMarket watchers are focused on whether performance in the gold jewelry sector can witness a turnaroundIn terms of secondary market performance, statistics from Wind reveal that the gold jewelry sector has been lacking in positive performanceFor instance, as of 2024, Chow Tai Fook (01929.HK) has experienced a drop of over 37%, while Lao Feng Xiang (600612.SH) has seen a decline of approximately 27%. Other brands like Chow Sang Sang (00116.HK) and Chao Hong Ji (002345.SZ) recorded decreases of over 22% and 21%, respectively

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Interestingly, Old Depot Gold (06181.HK), listed in the second half of 2024, saw its stock rise by 11% since early 2025.

Simultaneously, the dramatic dip in retail sales has significantly impacted industry earningsChow Tai Fook recently disclosed that for the first half of the 2025 fiscal year (April 1 to September 30, 2024), the group’s revenue fell 20.4% to 39.408 billion HKD, with net profit down by 44.4% to 2.53 billion HKDWithin this report period, the revenue from gold jewelry products saw a decline of 21.6%, comprising nearly 80% of the group’s overall revenue.

In terms of restructuring retail operations, Chow Tai Fook shuttered 239 retail stores in the first half of the year, an increase from 145 store closures in the previous fiscal quarterAs of the end of September 2024, the group had a total of 6,968 retail locations in mainland China, of which approximately 77% were franchise stores.

In a similar vein, L’Occitane (00590.HK) reported a total revenue drop of 27% to 5.449 billion HKD in the first half of the 2025 fiscal year, with net earnings falling 53% to 434 million HKD

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In the six months ending on September 30, 2024, the company shed 175 stores, a stark contrast to the 76 stores reported in the second quarter alone, signaling a troubling trend.

Chow Sang Sang (00116.HK) also disclosed a significant decrease for the entirety of 2024, with total revenues of 11.3 billion HKD, reflecting a drop of about 13%, alongside a net profit of 526 million HKD, down 36.41% year-over-year.

Industry analysts have highlighted the need for the gold jewelry market to proactively tackle these challenges and identify new growth avenuesThis could involve enhancing product quality and design effectiveness to better capture consumer interestAnother avenue may be the introduction of promotional offers that resonate with consumer preferences, thereby stimulating sales in a sluggish market.

Turning our eyes towards gold prices, it's noteworthy that the relentless upward trajectory witnessed since 2024 seems to have hit a snag as we transition into 2025. Gold futures, particularly on the COMEX market, soared past crucial thresholds, including 2,200, 2,400, 2,600, and 2,800 USD per ounce, culminating in a near 27% annual rise

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However, signs indicate that the momentum for further increases in gold prices might be waning.

Recently, analysts at Goldman Sachs have adjusted their gold price expectations, predicting that the Federal Reserve may reduce its interest rate cuts for 2025. Thus, their year-end target price for gold has been revised downward from 3,000 to 2,910 USD per ounceGoldman analysts articulated that the Fed is now anticipated to lower rates by only 75 basis points, a shift that has direct implications for their projections regarding gold price movements.

Meanwhile, escalated risk-averse sentiments across the market have played a role in the fluctuations of gold pricesWang Xiang from Bosera Fund noted that rising concerns over tariffs have amplified risk aversion, thereby bolstering safe-haven assets such as the U.Sdollar and goldNevertheless, robust economic data in the U.S., particularly in December's manufacturing PMI, has driven a rise in the U.S