This photo taken on September 23, 2011 shows Chinese bank staff standing by the country's first gold vending machine in the popular Wangfujing Street in Beijing, where shoppers can insert cash or use a bankcard to withdraw gold bars or coins of various weights based on market prices, while each withdrawal is capped at 2.5 kg or one million yuan (about $156,500 U.S.) worth of gold.STR/AFP / Getty Images
It has been a rough month for gold prices. But you'd never know it to see the bright red banner draped across the front of the Arts and Crafts Emporium on Beijing's central pedestrian mall of Wangfujing, proclaiming the opening of the country's first automated gold vending machine here.
"Gold is very popular now and this is a very convenient way to buy it, just like using a bank machine," said a staffer with the Gongmei Gold Trading Co., watching over the machine after a brief unveiling this week. In typical new-China fashion, the gold ATM went online this week with great fanfare, then was switched off again after it couldn't produce receipts.
But the Gongmei company which has brought the vending machine to Beijing has promised it will come out of its 8th floor hiding place and onto the emporium's main floor this weekend once a software glitch is repaired, just in time for China's National Day holiday.
China is the world's second-fastest growing market for gold, with a population that is steadily becoming better off, but which has few reliable options for investment. Stock markets are volatile, the property market is inflated and limited by government restrictions, and inflation of just over 6 per cent has not abated.
The ATM dispenses gold bars and coins based on market prices, which are to be updated every 10 minutes. It can hold up to 200 kilograms of gold at once, in varying denominations.
It is opening after a rocky month for gold prices; the spot price has fallen from a high of $1,905.56 on Sept. 5 to hover around $1,624 this week.
But China's demand for gold is growing, rising 25 per cent in this year's second quarter, year over year. Demand for gold jewelry was up 16 per cent, while demand for gold bars and coins was up 44 per cent.
"Increasing prosperity among Chinese consumers, supported by very strong growth in the domestic economy, is still a driving force behind gold jewelry demand. However, the investment motive also remains a key influence, fuelled by the persistent high inflation that has kept real interest rates negative for some time," reads the World Gold Council second-quarter report for this year.
Recent market losses have also been stemmed largely to the demand in China and India; while India prepares for wedding season, China has been gearing up for the gift-giving associated with the national holiday, popularly known as Golden Week.