China’s Golden Week and its Effect on the Gold Price
Year after year, China’s Golden Week National Holiday causes the gold price to tumble. In fact, it is one of those two weeks in the year when pretty much the whole of China is closed including factories and offices. The first week is in January or February, the Spring Festival, over Chinese New Year and is subject to the lunar calendar. The other is now, the Golden Week, that starts around the 1st October, a National Holiday. During these weeks migrant workers are seen traveling to their homes within China and the more affluent heading for holidays abroad. With China being such as vast and important global market, these holidays have a knock-on effect on the global economy and thus our markets.
The price of gold plummeted below US$ 1.500 per ounce, reaching nearly US$ 1.460, on 30th September which was the start of China’s Golden Week. During the week the price has remained steady around the US$ 1.500 level.
The Shanghai Gold Exchange also remains closed during this week and will reopen on 9th October, as with the rest of China. It is anticipated that the price will re-balance itself, as has been the case over the last decade. At the beginning of September the price of gold reached US$ 1.555 per ounce.
Here is a glance on the last few years that explains the above price movement and the potential upward swing of gold to levels prior 1st October.
Source: Bloomberg
Cautiously, industry experts are predicting for gold to close the year at the US$ 1.600 per ounce and a price of USD$ 2.000 per ounce in the next year, 2020.
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