China’s net gold imports from HK fall to lowest since June 2011

Songapore (Aug 25)   China’s net gold imports in July from main conduit Hong Kong (HK) tumbled to their lowest since June 2011 because the country already has amply supply from shipments in earlier months, while jewellers are waiting for lower prices.

The country’s crackdown on corruption could have also sapped demand in China, which overtook India as the biggest consumer of the precious metal last year with imports topping 1,000 tonnes.

“I think the corruption drive in China is an important factor. Nobody wants to show off their wealth,” said a dealer in Hong Kong, referring to President Xi Jinping’s anti-corruption campaign.

“Also the economy in China is struggling. People who have bought gold, do not want to buy more. The big dealers think gold is pointing south, and that dampens speculative interest.”

July net gold flows into China from Hong Kong dropped to 22.107 tonnes versus 40.543 tonnes in June, according to data e-mailed to Reuters by the Hong Kong Census and Statistics Department.

Total gold imports from Hong Kong fell to 38.945 tonnes from 56.047 tonnes in June.

Gold edged down on Monday, hovering near its lowest in two months on a firmer US dollar and speculation of an eventual increase in US interest rates that could hurt the metal’s appeal as a hedge against inflation.

After falling nearly 2 per cent last week, bullion attracted buying from jewellers in Asia, but the amount was limited and investors stayed on the sidelines.

“I think China has bought a lot of gold in the previous quarters. They are just slowing down now,” said a dealer in Singapore.