gold imports to keep growing after hitting record high by Lewa Pardomuan and Fayen Wong - Reuters | Tue
May 7, 2013 10:19pm EDT Net gold flows to China from Hong Kong hit
record in March
SINGAPORE/BEIJING, May 7 (Reuters) - Chinese
gold imports are likely to swell further after more than
doubling to an all time high in March as retail consumers
pounced when prices plunged to a two-year low last month.
China is the world's second largest buyer after India,
and in both countries the steep fall in international gold
prices in April unleashed years of pent up demand for coins,
bars and jewellery.
That will help bolster prices for the metal, which has
been abandoned by funds in other parts of the world in the
wake of its historic fall.
"Physical demand picked up significantly over the
last couple of weeks. Consumers and industrial users tend
to see price drops as buying opportunities," Zhang
Bingnan, secretary-general of the China Gold Association,
"Investment demand should continue to stay strong
through the rest of the year because of limited investment
alternatives," said Zhang, adding that gold sales and
processing volumes both spiked in April.
Net gold flows from Hong Kong to China, the world's No.
2 gold consumer after India, jumped to 223.519 tonnes in
March from 97.106 tonnes in February, smashing a previous
record of 114.372 tonnes in December, data from the Hong
Kong Census and Statistics Department showed on Tuesday
That makes up more than half of record gold exports to
China from Hong Kong in 2012, which stood at 557.478 tonnes.
In March, Shanghai gold futures <0#SHAU:> fetched
premiums of more than $30 to global prices, making it cheaper
to buy the metal overseas.
April could see imports swell further after the drop in
international prices spurred frenzied buying in Asia, leading
to a shortage of gold bars and coins in Singapore as well
as Hong Kong, which is China's main source for gold imports.
Appetite for gold from India and China is a major factor
in international gold prices. The two countries account
for more than a third of global demand, according to the
World Gold Council. China produced 403 tonnes of gold in
2012, but consumption was more than double at 832.2 tonnes.
Gold tumbled to around $1,321 an ounce on April 16, its
lowest in more than two years, after a fall below $1,500
and fears of central bank sales led to a sell-off that stunned
investors and prompted them to slash holdings of exchange-traded
funds. It stood at around $1,460 on Tuesday.
"April imports will be stronger than March,"
said Ronald Leung, chief dealer at Lee Cheong Gold Dealers
in Hong Kong. "The world was buying gold and China
was no different at all."
The drop in prices has prompted a gold rush in China, with
Chinese shoppers flocking to retailers to buy jewellery
A spokesman for Hong Kong jewellery chain Chow Tai Fook
, the world's largest jewellery retailer by market value,
told Reuters that traffic at its China stores jumped by
50 percent during the May Day holidays.
The surge in Chinese travellers during the three-day May
Day holiday also drove gold sales in Hong Kong to rise by
an estimated 50 percent, with total gold sales from April
29-May 2 reaching some 40 tonnes, local media quoted Haywood
Cheung, president of the Hong Kong Gold and Silver Exchange,
The jump in Chinese physical demand also prompted some
banks to ship in more supplies from London and Swiss vaults,
With China's economy still on shaky ground, investors there
with limited options for their cash could still see gold
as attractive. The fall has hurt big funds elsewhere that
bet on gold continuing a 12 year bull run, eroding investor
confidence in the yellow metal.
China's annual export growth may have picked up slightly
in April due to a low comparison from a year ago, while
import growth probably eased, a Reuters poll showed, suggesting
the underlying momentum for both the domestic and global
economies remains tepid.