China stocks up gold to meet seasonal demand

PUBLISHED : Thursday, 28 November, 2013, 4:17am
UPDATED : Thursday, 28 November, 2013, 4:52pm

Gold shipments to the mainland from Hong Kong rose last month as jewellers and retailers bought the metal to build up inventories before a peak-demand season at the end of the year.

Net imports, after deducting flows from the mainland into Hong Kong, were 129.9 tonnes, compared with 109.4 tonnes in September, according to calculations based on data from the Hong Kong Census and Statistics Department.

The amount in the first 10 months more than doubled to 955.9 tonnes from a year earlier, the data shows.

Mainland China is on course to overtake India as the world's biggest bullion consumer, with demand forecast to reach 1,000 tonnes this year, according to the World Gold Council.

Gold rose 5.5 per cent from a 34-month low in June as price drops spurred demand for jewellery, coins and bars in Asia, even as other investors cut holdings in exchange-traded products.

"There's preparation for demand that always ramps up in the fourth quarter," said Wang Xinyou, the head of the precious metals division at Agricultural Bank of China in Beijing.

Spot gold was at US$1,247 an ounce yesterday afternoon. The metal has lost 26 per cent this year, tumbling to $1,180.50 on June 28, the lowest level since July 2010. Holdings in exchange-traded products slumped 30 per cent this year on prospects for a global economic recovery.

Mainland China's demand for jewellery, bars and coins rose 30 per cent to 996.3 tonnes in the year to September, while usage in India gained 24 per cent to 977.6 tonnes, according to the gold council.

Consumption that may ease 2.4 per cent next year from a record 1,000 tonnes this year, according to a survey, still points to purchases greater than any other nation and more than the United States, Europe and the Middle East combined.

Mainland Chinese bought 147.9 tonnes last month, including scrap, compared with 116.3 tonnes in September, data from the Hong Kong government showed. The purchases were three times higher than the 47.5 tonnes a year earlier.

The mainland does not publish such data.

Exports to Hong Kong from the mainland were 18 tonnes last month, according to a separate statement from Statistics Department. That compares with 6.9 tonnes in September and 23.6 tonnes in October last year.

Bullion of 99.99 per cent purity on the Shanghai Gold Exchange fell for a second month, by 1.2 per cent.