China's Gold Bullion Imports Slip But "Very Strong"

Net gold bullion inflows from Hong Kong top 100 tonnes for 4th month running...

 

GOLD BULLION shipments to mainland China through Hong Kong eased in August but remained "very strong" according to analysts.

 

Reaching 110 tonnes net of exports in August, China's gold bullion imports dipped from 113 tonnes in July, but held above 100 tonnes for the fourth month in succession.

 

The world's No.1 gold mining nation since 2007, China is set to become the world's No.1 buyer of gold in 2013, thanks both to a drop in India's official flows and also a surge in domestic demand after the sharp price falls this spring.

 

Gold bullion prices rallied more than 20% over July and August, hitting $1433 per ounce before easing back in September.

 

"Appetite for gold seemed to slow somewhat," Bloomberg quotes Duan Shihua at Shanghai Leading Investment Management Ltd. "[China's] investors became more cautious after the rapid run-up in prices" over the summer.

 

Moreover, "Some banks might have used up their [import] quotas."

 

The People's Bank of China last week moved to expand the number of companies licensed to import and export gold bullion, continuing the deregulation begun in 2002.

 

"These are very strong numbers again," Reuters today quotes Commerzbank analyst Carsten Fritsch. 

 

"Gold demand from China remains brisk, offsetting weak demand in the West and confirming the shift in gold demand from West to East."

 

Official gold imports to India remain weak, however, with perhaps only 100 tonnes going into the former world No.1 between July and end-September, according to market-development group the World Gold Council's local spokesman today. Smuggling is widely reported to have jumped in  2013 as a result of the government aggressive anti-gold import measures, starting with 10% import duty.

 

Looking ahead, however – and looking to challenge China's claim as No.1 gold bullion consumer – India will see "20% more auspicious days" on the Hindu calendar in late 2013 than last year, "and also there is pent-up demand from last quarter," reckons P.R.Somasundaram.

 

"Monsoon has also been good, so all indications are demand will be robust."

 

India's peak season for buying gold traditionally comes around the Diwali festival of lights, falling in early November this year. The peak season in China then comes with the Lunar New Year, taking place in 2014 on January 31st.