China's July net gold imports via Hong Kong plunge to 8-year low

Beijing (Aug 26) - China’s net gold imports via Hong Kong in July slumped 42% from the previous month to the lowest in more than eight years, data from the Hong Kong Census and Statistics Department showed on Monday, largely reflecting the impact of official steps to curb imports.

Net imports via Hong Kong to China, the world’s top gold consumer, fell to 8.085 tonnes — the lowest since May 2011 - in July from 14.043 tonnes in June, according to the data.

Total gold imports via Hong Kong dived nearly 35% to 10.915 tonnes last month from 16.685 tonnes in June. The total imports also slumped to their lowest since May 2011.

Earlier this month, according to bullion industry sources, China partially lifted restrictions that had stopped an estimated 300-500 tonnes worth $15-25 billion at current prices from entering the country since May.

China’s central bank had for several months curtailed or not granted import quotas to commercial banks responsible for most of the gold that enters the country. Sources said those measures had possibly been designed to reduce capital outflows and bolster the yuan, which has slumped to 11-year lows against the dollar.

Retail and jewellery demand in Hong Kong has been hurt by political unrest in the Asian financial hub, according to traders.

International benchmark spot gold prices registered a third consecutive monthly gain in July, with bullion being sold at a premium of between $10 to $13 in China over the benchmark for most of the month.

China does not provide trade data on gold. So, the Hong Kong figures serve as a proxy for flows to the mainland.

The Hong Kong data, however, might not provide a complete picture of Chinese purchases as gold is also imported via Shanghai and Beijing.

Reuters