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.

"Physical demand from China remains robust even at these lofty levels, with seasonal demand into Chinese New Year likely to provide support, or at the very least a cushion to any downside swings," Alex Thorndike, a metals dealer at MKS Group told Reuters.

Lu Huiquan in New York contributed to this report.

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