China - Two weekends ago, Mr Shawn Wu accompanied his mother to a Beijing supermarket for groceries.

They ended up buying cabbage, pork and gold chains - for a retailer of the precious metal had strategically set up glass cabinets, with signs like "Big price drop, grab now!", in front of check-out counters to entice shoppers.

"The temptation was too great. My mum bought four gold chains on the spot - using my debit card," said Mr Wu, 32, who declined to say how much he spent.

Housewives - or da ma as they are known in China - like Mr Wu's mother are reportedly one of the formidable forces that caused gold prices to rebound to over US$1,460 (S$1,800) after a sharp 15 per cent drop over a few days to US$1,330 on April 15.

China's spending spree - on 300 tonnes of gold worth some 100 billion yuan (S$20 billion) in just 10 days to May 1 - has made global headlines.

All this has also spawned jokes of how deep-pocketed da mas have beaten Wall Street moguls trying to drive gold prices down.

But the gold-buying frenzy also highlights the paucity of good investment options available to China's increasingly wealthy middle class. Mass affluent Chinese - that is, those with assets between US$100,000 and US$1 million - are eager to invest, with 88 per cent already doing so, a recent report by Forbes China and wealth management consulting firm CreditEase showed.

They tend to prefer "conservative investment channels", noted CreditEase chief wealth management expert Lv Qi, adding that their top choices are wealth management products such as fixed income instruments as well as property and bank deposits.

But for some in this group like Mr Wu, a director at a pharmaceutical firm, even these low-risk options are less attractive of late.

"Some wealth products are under suspicion after a few cases of losses last year and housing market curbs make it difficult to buy new units," he said.

So Chinese investors' rush to buy gold when the price dropped is rational since it is a good hedge against inflation, said University of International Business and Economics finance expert Ding Zhijie.

Still, their desperation to find an instrument that preserves the value of their assets does "show that the development of China's investment environment is not yet sound and healthy", he added.

Even the Communist Party mouthpiece, the People's Daily, weighed in on Chinese people's limited investment options.

"Faced with rising consumer costs and high housing prices, how does one prevent assets from losing value? More and more people are getting frantic," it wrote last Friday. That was partly why so many pounced on gold, since China's banks - flush with a massive 9 billion-plus yuan of deposits - cannot offer interest rates high enough to offset inflation, the paper added. Consumer prices rose 2.6 per cent last year.

Interest rates have not been made significantly more market- oriented while securitisation - converting illiquid assets into marketable securities - is still at a "relatively early stage", noted Mr Lv. So there are very few fixed income wealth management products. But he does expect China's financial market to mature and become more diverse over time.

This is driven by demand from the mass affluent group, which is burgeoning in size and investment appetite. Their numbers are expected to rise from 10.26 million last year to over 12 million this year, with each having 1.33 million yuan on average to invest, the Forbes-CreditEase poll showed.

This is raising pressure on the Chinese government to deepen financial reforms and open up the market to a broader range of products, noted Professor Ding.

Meantime, gold will retain its shine for the Chinese. "From ancient times, the Chinese have always seen gold as a key way to preserve wealth," noted Mr Xu Qize, an analyst with Tianjin Precious Metals Exchange's Zhongzhou Investment Co.

So, "gold could still rise further despite short-term fluctuations".

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