Gold prices in China are firming in anticipation of the upcoming Chinese New Year when many Chinese purchase gold-related items to help celebrate the holiday.

Reuters reports that demand for gold has been increasing in China as banks and retailers stock up for the Lunar New Year holiday on Feb 19. Chinese premiums on the Shanghai Gold Exchange, the platform for all physical trade in the mainland, rose to a high of $7 an ounce last week compared with about $4 late last month.

Lina Mei, owner of Lina Mei Jewelry in Flushing, Queens in New York City said gold sales in her store increase 20 to 30 percent for the New Year's celebration. The native of Taishan in Guangdong province has been in the US for 25 years and has operated her store for 12 years.

"Buying gold is a tradition," Mei told China Daily. "It's more than a gift - gold also brings good luck in the New Year."

Mei said that buying gold also represents an investment for the Chinese. "It means you have saved some money and you want to purchase something that is stable in value."

Even though many Chinese buy gold necklaces and rings, the most popular items are pieces such as a gold paperweight or sculpture.

Mei said the Chinese also purchase gold coins to receive a blessing from the gods. She said gold is not considered a romantic gift between couples.

"The younger generation doesn't care for gold," said Mei. "Gold is mainly for people over 40 and it is usually given from family to family or business to business."

Gold is also an investment used by investors as a hedge against inflation and to balance a portfolio. Gold has struggled and underperformed equities over the last few years. Gold prices reached a "top" in 2011 rising to a record high of $1,921.50 an ounce.

In 2012, prices rose just 7 percent. In 2013 gold prices tumbled 28 percent and in 2014, gold declined by 1.5 percent. It is currently trading at about $1,233 an ounce.

Some investors look for at least a temporary pickup in gold as the Chinese New Year approaches. In 2013, China overtook India as the world's largest consumer of gold.

"There does seem to be a seasonal element to consumer demand for gold in several countries. In China, demand increases in months leading up to the New Year. In India, it is said to increase during the holiday/wedding season, which runs from the end of September through January," said Richard Grossman, Professor of Economics at Wesleyan University.

Still the Chinese New Year may not be able to provide as big a boost as others expect.

"Although China is the largest consumer of gold, it is also the largest producer as well. That means Chinese demands' influence on the global market is limited," said Kevin Chen, Co-Founder and Chief Investment Officer of Three Mountain Capital Management, a global macro hedge fund. He is also an adjunct professor of New York University.

"The country with the largest impact is still India. Indian people use a lot of gold in marriage and funerals," he said.

Grossman told China Daily that inflation, currency movements, and economic and political stability are "far more important factors" in gold price fluctuations than seasonal demands from China and India.

2015 is the 4712th Chinese year and the zodiac year of the sheep. "People will also buy something connected to sheep to comfort the gods and avoid misfortune," said Mei.

Lu Huiquan in New York contributed to this report.

paulwelitzkin@chinadailyusa.com