Gold News

China's Gold Bars and Coin Demand Jumps, Beijing Tries Debt Stimulus Yet Again

The PRICE of GOLD BARS in London, center of the world's bullion trading and storage network, rose in US Dollar terms and edged back towards last week's new Euro and UK Pound records on Wednesday as fears of the Hamas-Israel war spreading continued to grow while global stock markets fell despite China's Communist authorities unveiling new stimulus debt-spending to try reviving the world's No.2 economy.
Global stock markets slipped and Western government bond prices fell back from this week's earlier rally, driving longer-term borrowing costs back towards their latest multi-year and near-2-decade records.
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Faced with a weak economy, falling shares and a real-estate slump, Chinese households made gold bar and coin purchases weighing more than 76 tonnes in July to September says BullionVault's comparison of new China Gold Association data today, down 4.1% by weight from the CGA's October 2022 data for the 3rd quarter of last year.
By value, however, today's numbers put China's retail gold investment spending 14.7% higher in Yuan terms and 8.5% higher in US Dollars versus Q3 2022, setting the highest quarterly spend since New Year 2021.
That would – outside the spikes of Q2 2013 and Q4 2016, when sharp falls in global gold prices were met with record-heavy Chinese demand – mark the highest non-New Year spending on retail gold bars and coins since at least 2010 based on data from specialist analysts Metals Focus published by the World Gold Council.
Chart of Chinese retail gold bar and coin demand by Dollar value, quarterly totals. Source: BullionVault
China's world-leading jewelry demand meantime slowed 8.7% per year by weight in July-to-September based on today's CGA data, but like bar-and-coin purchases it also rose by value as China's domestic gold prices rose to new all-time highs.
Shanghai's daily gold benchmark rose above $2000 per Troy ounce in September – setting a run of record premiums compared to London gold quotes – as household demand rallied from an early summer lull but the People's Bank restricted new imports of bullion amid the world No.2 economy's worsening outlook, real estate slowdown, falling stock market and weakening currency.
The Yuan today held a little worse than ¥7.3 per US Dollar, marginally stronger than the 16-year lows reached last month.
"Investors dump China shares despite new efforts to shore up the economy," says a headline at CNN, reporting how what US investment bank Morgan Stanley calls an "unprecedented" flight out of Chinese equities by foreign funds has pulled the CSI300 index towards 5-year lows, with the politburo's latest  ¥1 trillion ($137bn) stimulus package spurring only a weak rally.
Parliament yesterday approved the issuance of new sovereign debt and allowed local governments to bring forwards their 2024 debt issuance too.
One of China's state investment funds – Central Huijin – this week said it's buying exchange-traded funds (ETFs) holding Chinese equities and will keep buying in a bid to stem the drop in its domestic stock market.
"China to choose fiscal muscle over big reforms to revive economy," says a story from Reuters, claiming that Beijing insiders are preparing "to unleash fresh fiscal stimulus...drawing on a well-used playbook that relies heavily on debt and state spending."
Ailing Chinese property developer Country Garden – owing almost $15 billion for repayment in the next 11 months – today defaulted on a Dollar-denominated bond for the first time, according to Bloomberg News.
Good Delivery gold bars traded for London settlement today rose back to $1983 per Troy ounce, close to last week's near 5-month highs, but the price of more industrially-useful silver struggled to regain the $23 level.
Shares in US tech giant Alphabet (Nasdaq: GOOGL) meantime opened Wednesday 8.5% lower despite reporting double-digit revenue growth but with its cloud computing division missing analyst forecasts for the third quarter.
Bank lending to non-financial corporations across the 20-nation Eurozone slowed to 0.2% annual growth last month, the weakest pace since late-2015, with the broad M3 measure of the 350-million citizen currency bloc's money supply continuing to shrink.
London gold bars priced in Euros reached €1875 while the UK gold price in Pounds per ounce also neared last week's near-all-time highs at £1638.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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