Orient Securities has released a research report suggesting that the short-term rebound in gold prices serves as a direct emotional and valuation catalyst for leading gold jewelry companies. If gold prices continue to rise, this could gradually translate into stronger consumer demand for gold ornaments at the terminal level. Regarding investment opportunities, the firm recommends focusing on companies with distinct brand differentiation, strong retail operations, or significant future expansion potential. Key preferences include Chow Tai Seng Jewellery Co Ltd (002345.SZ), rated "Accumulate," for its dual strengths in product development and brand management, along with Zhou Dasheng (002867.SZ), also rated "Accumulate," for its solid fundamentals and high dividend expectations. Additionally, some established Hong Kong-listed leaders, such as Chow Tai Fook Jewellery Group (01929.HK), remain noteworthy, though unrated.
According to Orient Securities, the recent rebound in the gold jewelry sector is primarily driven by sentiment recovery linked to rising gold prices. The sustainability and magnitude of this rebound will depend on the persistence of the gold price uptrend, especially as the sector enters the peak consumption season for gold jewelry in September. While the sector has shown some upward movement, the firm attributes this mainly to gold price dynamics, as well as the generally low valuation levels and favorable stockholding structures of leading companies.
Since early 2026, terminal consumption of gold jewelry has remained relatively under pressure, with no significant signs of recovery yet. Against the backdrop of subdued domestic consumer spending, coupled with sharp gold price adjustments following a substantial rally earlier this year, overall sales in the domestic gold jewelry sector have been strained. Data from the China Gold Association shows that in the first half of 2026, China's gold consumption totaled 511.412 tons, up 1.23% year-on-year. However, gold jewelry consumption fell 33.88% to 132.133 tons, while gold bar and coin demand surged 28.42% to 339.336 tons. Orient Securities suggests that persistently high and volatile gold prices may lead some consumers to delay purchases or shift towards trade-in programs and investment-oriented demand for bars and coins. Based on the firm's grassroots tracking, no significant terminal-level recovery has been observed yet, but sustained gold price increases could positively impact gold jewelry consumption over time.
During the industry adjustment, structural divergence has become evident, with certain categories and brands outperforming. The firm notes that over the past two to three years, the sharp rise in gold prices, combined with this year's volatility, has driven ongoing channel restructuring and shifts in brand operating models within the gold jewelry sector. The pace of channel consolidation has been slower than previously anticipated, and differentiation among various types of players is intensifying. Lightweight, fashion-forward gold jewelry and high-end ancient gold craftsmanship products have shown relatively strong performance, aligning with the broader trend of economic and consumer polarization. Orient Securities expects brands focusing on these two categories to benefit more from current market conditions.
Risk factors include potential fluctuations in domestic consumer demand recovery, gold price volatility, and geopolitical uncertainties that could impact gold jewelry consumption.