"Have you bought any gold?" has become a common question among many Chinese people over the past three weeks, as sharp fluctuations in gold prices have prompted a sales frenzy for the precious metal.

On the afternoon of Saturday, consumers were crowded around the gold counters at Beijing Guohua Department Store, one of the best-known sales outlets for gold bars and jewelry in the capital.

"I thought it was time I should buy some gold, after I heard the news that gold prices had fallen a lot in recent days," said a native of Beijing in her late 50s, who only gave her surname as Cai. She planned to buy a small amount of gold bullion at the department store.

The recent gold buying spree came after big fluctuations in gold prices in the international market.

On April 12, gold futures for June delivery on COMEX, a subdivision of the New York Mercantile Exchange, slumped 4.1 percent to $1,501.4.

Concerns over Cyprus' plan to sell its gold reserves to finance its bailout as well as a potential cutback in the US monetary stimulus program are believed to have had an impact on the appeal of gold.

The announcement of unexpectedly weak data for China's economy was also believed to have dented market sentiment toward gold.

On April 15, the June gold contract fell by 9.3 percent to a closing price of $1,361.10 per ounce on COMEX, the steepest daily loss in almost 30 years.

In accordance with the international market, gold prices on the Shanghai Gold Exchange and gold futures on the Shanghai Futures Exchange also fell, fueling purchases of physical gold.

A strong rebound followed in international and domestic gold prices, but the buying fever did not disappear.

By Wednesday, the June gold contract had settled at $1,446.20 per ounce on COMEX, down 1.8 percent from the previous trading day, but still 6 percent above the price on April 15.

Analysts say this rebound was partly driven by frantic demand for physical gold, especially in China.

Snapping up gold

"Chinese consumers' rush to buy gold has definitely pushed up the international gold prices, as gold supply tightened as a result of the jump in sales," Wang Ruilei, chief analyst with Chengdu-based Boyin Precious Metal Investment, told the Global Times Monday.

"We haven't seen such a rush for years," Jiao Guangyi, deputy general manager of Beijing Sun Gold Store, told the Global Times Sunday.

Jiao said the store has to replenish its inventory on a daily basis to satisfy the demand.

The biggest single deal the store has netted recently was a purchase of 15 kilograms of gold bullion.

The recent May Day holiday season appears to have whipped up the buying fever, with Beijing Youth Daily reporting Thursday that the sales revenue from gold products hit 200 million yuan ($32.5 million) during the three-day vacation in Caishikou Department Store, Beijing's largest gold jeweler retailer also known as Caibai.

This was an increase of more than 20 percent over the previous year, while Guohua Department Store saw a 50 percent surge in gold sales during the holidays.

Outside the capital city, the gold rush seems to be even more frantic.

A resident in Nanchang, East China's Jiangxi Province recently bought nearly 20 kilograms of gold bullion for around 3 million yuan, Jiangxi Morning Post reported on April 25.

In Ningbo, East China's Zhejiang Province, sales of gold bars and gold jewelry products exceeded 100 million yuan in the course of 10 days after April 12, nearly quadruple last year's figure, Hangzhou-based Qianjiang Evening News reported on April 24.

East China's Fujian Province also saw a gold buying spree, with Fuzhou-based Strait News reporting on April 26 that the amount of gold products sold in the province during the 10 days since April 12 totaled at least 30 tons.

Chinese mainland buyers are estimated to have purchased 300 tons of gold bullion in the first 10 days after April 12, roughly 10 percent of the annual global gold output. 

China's demand for physical gold appears to have been noted by US investment bank Goldman Sachs, which advised investors to stop betting on lower gold prices on April 23.

India has also reportedly seen a gold buying bonanza in the wake of the price fluctuations.

Risky investment?

Many experts have warned of a turnaround in the gold market, but there are no signs of a slump in demand from Chinese consumers.

"Gold has been able to maintain its real value for more than a millennium," said Jiao of Sun Gold Store, noting that apart from property, gold could be the best investment choice in the current economic climate.

"Gold investment is ideal for me at present, as buying a property requires too much money," the Beijing native Cai also said.

In an article posted on his Sina blog on April 26, Xie Baisan, director of Fudan University's Institute of Financial and Capital Markets, said that investing in gold and property in the nation's medium-to-large cities are among the best investment choices in the country.

While buying physical gold, especially in small amounts, has generally been regarded as reasonable, investing heavily in gold derivatives involves greater risks, particularly in the light of some dubious recent gold investment deals.

An asset management company in Guangzhou was closed down for fraud by local authorities at the end of March, as the company claimed to offer an annualized yield of up to 20 percent for gold investment, Shenzhen-based Securities Times reported on April 19.

It was just the latest case of a gold investment trap in the country. Around 70 million yuan has been cheated out of nearly 200 people, who thought the company would invest their money in the overseas gold investment platform, said the report.

For average investors, it would be much safer to invest in physical gold rather than gold derivatives, Boyin Precious Metal Investment's Wang suggested. Gold prices are expected to drop further to around $1,300 per ounce by the end of the year, Wang noted, given that an improvement in the global economy may dent the appeal of gold as a safe haven.

"Blind investment in gold would still be risky, although the metal is acknowledged to have the ability to retain its value," Wang said, noting that it is difficult to predict trends in the gold market.