Gold imports drop as Asia crisis stings

PUBLISHED : Tuesday, 04 August, 1998, 12:00am
UPDATED : Tuesday, 04 August, 1998, 12:00am

Monthly gold imports into Hong Kong have continued to drop since a February high, as the regional crisis dampens consumption, dealers say.

Just 12.9 tonnes of the precious metal were imported into Hong Kong in May, the third consecutive month imports have fallen.

For the year to May, imports have reached 179.1 tonnes, just 2.7 per cent down on last year's five-month total, thanks to strong trading in February, which was stirred after gold hit an 18-year low of US$277 an ounce in January.

Chinese Gold & Silver Exchange Society president Raymond Chan Fat-chu said gold imports were likely to fall well short of last year's 434.8 tonnes. If current prices were maintained, he predicted 350 tonnes would be imported, a decline of almost 20 per cent.

However, if gold prices dipped further because of sales by Japanese investors, the subsequent drop in the price of gold could push consumption up by about 30 tonnes, he said.

Yesterday, the Hong Kong spot gold price ended at US$286.30-$286.80 an ounce.

Physical demand for gold has improved in Middle Eastern markets in the past month because of the dip in the price of gold, from a high of $314.70 in late April.

Traders say, however, that demand across Asia remained weak because of the poor economic conditions and seasonal factors. Asian gold demand also correlated with the health of the yen, which has fallen sharply since the beginning of the year, they said.

Mr Chan said the exchange was attempting to position itself as the central exchange for gold trading across China in a bid to boost activity.

Mr Chan said the exchange would hold seminars in October for participants in the mainland market.

The mainland is the world's third-biggest gold consumer and ranks in the top five gold producers.

Last year's per-capita consumption of gold on the mainland was a relatively low 0.2 grammes, compared with Hong Kong at nine grammes and Taiwan at 6.9 grammes. The world average is 1.5 grammes.