Appetite for gold in China has soared according to the latest data, with the largest consumer of bullion increasing its holdings as the precious metal hits historic peaks. But will China’s imports of the precious metal level off in the coming months, or continue to balloon? Our analyst shared her views recently.
An article by Kitco noted that between February and March 2024, China’s gold imports (net) through Hong Kong saw an increase of 40% according to data from the Hong Kong Census and Statistics Department. The data showed net imports totaled 55.836 metric tons in March, as opposed to 39.826 tons in February. Gold imports through Hong Kong experienced a significant surge, climbing approximately 40.2% to reach 63.499 tons.
This development is of particular importance, given that China is the largest consumer of bullion, and its purchasing patterns can affect the prices of gold all over the world. According to recent reports released earlier this month, China's central bank added 160k gold troy ounces to its reserves in March. By the end of the month, China's total gold holdings were over 72,740,000 ounces, marking an increase from approximately 72,580,000 ounces recorded in the month previous.
The People’s Bank of China (PBOC), the entity that is responsible for regulating gold inflow to commercial banks through quotas, emerged as the foremost purchaser of gold among official sectors in 2023. On April 12, Spot gold prices surged to $2,328 per ounce, following a historic peak of $2,431.29.
“Consumer uncertainty over the economy is funneling disposable income towards gold as a risk hedge,” said StoneX analyst Rhona O’Connell. February imports were weak – reflecting the restriction on import quotas and the fact that the Lunar New Year was in February this year – but March numbers suggest a return to normal, she added.
Demand for gold in China has remained strong throughout the year. This can be attributed to persistent currency devaluation as well as uncertainty among investors about the near future of the Chinese economy. It's important to keep in mind that depending solely on Hong Kong data might not provide a complete view of Chinese gold acquisitions, because gold also flows into the country through ports like Beijing and Shanghai. The world’s primary bullion refining and transit center, Switzerland, saw an increase in gold exports to China and Hong Kong in March.
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