In a testament to the enduring appeal of gold as a store of value, China’s net gold imports via Hong Kong surged by 51% in January, reaching their highest levels since mid-2018, according to official data released on Tuesday. This spike comes as consumers eagerly stock up on the precious metal ahead of the Lunar New Year festival.
The World Gold Council (WGC) noted in a recent statement that amidst lackluster performances in local assets such as equities and properties, the robust performance of the renminbi (RMB) gold prices in recent months has attracted investors seeking safe-haven assets. This trend has fueled increased interest in gold bars and coins, prompting manufacturers and commercial banks to actively replenish their stocks in preparation for the Chinese New Year holiday. Consequently, wholesale gold demand in China saw its strongest January on record.
January witnessed net imports into China, the world’s largest gold consumer, totaling 76.248 metric tons, marking a significant uptick from December’s 50.381 tons, as per data from the Hong Kong Census and Statistics Department. Total gold imports via Hong Kong, including re-exports, experienced a notable 37% surge, reaching 81.967 tons.
However, it’s important to note that the data from Hong Kong may not fully capture Chinese gold purchases, as gold is also imported through Shanghai and Beijing. Moreover, the People’s Bank of China regulates the inflow of gold into the country through quotas allocated to commercial banks.
China’s appetite for gold remains robust, with holdings reaching 72.19 million fine troy ounces by the end of January, extending a buying spree that commenced in November 2022.
Ahead of the Lunar New Year holiday, restocking activities surged, driving wholesale demand to a record high of 271 metric tons in January, according to analysts at ANZ. They further noted that the spot premium of gold in China indicates healthy physical demand, with Chinese dealers selling gold at premiums of up to $57 an ounce over global benchmark spot prices.
Independent analyst Ross Norman suggested that the surge in gold imports is not solely attributable to the Lunar New Year festivities but reflects broader economic concerns. The sluggish performance of the Chinese stock market and losses in the property sector have contributed to heightened interest in gold as a safe-haven asset, amplifying demand beyond seasonal festivities.
