File pohoto: Customers buy gold jewelry in a department store in Beijing. Photo: CFP

A record high gold price has sent gold-related stocks on Chinese market soaring Monday due to rising risk aversion among the investors, after China and the US each closed a consulate of the other and as COVID-19 continues to wreak havoc.

The gold price hit $1,934.07 per ounce at 4 pm Monday (Beijing time) during London's trading session and surpassed $1,940 per ounce hours later, its highest price since 2011. 

The skyrocketing gold price led to a slight rise on the Chinese stock market, with the Shanghai Composite Stock Index up 0.26 percent and the Shenzhen Component Stock Index up 0.32 percent. 

The rise is driven by the ongoing COVID-19 pandemic and rising China-US tensions, which have resulted in growing risk aversion among the investors, said Liu Xuezhi, a macroeconomics expert at the Bank of Communications.

Such a mood remains strong and may last for a while, which could continue pushing up the gold price "because geopolitical risks is rising," Liu told the Global Times Monday. 

However, he stressed that recent stock market fluctuations in China will not change the country's bull market trend. 

"China's overall economic performance remains sound, which can be reflected by its better-than-expected economic recovery in the second quarter. The economic fundamentals support the stock market's tick-up," Liu explained. 

China's GDP growth in the second quarter beat forecasts and rose 3.2 percent year-on-year amid the pandemic. 

Even if the Chinese stock market were to be impacted by the escalating China-US tensions, the shock to investors would be short term, Liu pointed out, adding that recent market volatility is the result of investors' rational self-correction. 

The gold price has risen 28 percent so far this year. 

According to the official Sina Weibo account of Chow Tai Fook Jewellery Group Monday, the price of pure gold accessories has hit 560 yuan ($79.95) per gram, and gold bars have topped 550 yuan per gram. Both have risen almost 20 percent from April 1. 

Global Times