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HK Trade Data Shows Chinese Gold Demand Falling As Investors Turn To Equities – Analysts

By Kitco News
Wednesday April 29, 2015 2:36 PM

(Kitco News) - China’s appetite for gold is once again attracting the attention of commodity analysts, but not for positive reasons.

According to trade data released Tuesday, China’s net gold imports from Hong Kong fell to 61.8 tonnes in March, down 7% from February and down a whopping 23% year-over-year. This was the second straight decline in imports from Hong Kong.

However, analysts have noted that some of the decline might be the result of more gold heading straight to the mainland, bypassing the island’s vaults. Analysts at UBS noted that trade data from Switzerland showed strong gold exports to China last month. According to teh data 46.4 tonnes of gold was shipped to mainland China.

“Over the past six months, China's gold imports from HK and Switzerland have averaged around 100 tonnes. While this stability is in a sense reassuring, we do not think the volumes are large enough for the market to get excited,” the analysts said in a research note published

Looking forward, UBS said that physical gold demand will struggle in China as equity markets remain the investment of choice for investors.

“Hong Kong's Hang Seng Index has reached record highs and the Shanghai Composite Index is around the highest levels since 2007. Equities appear to be diverting investors' attention away from gold, and we think this has been augmented by the latter's lacklustre performance and the overall absence of a clear price trend in the past couple of years,” they said.

Analysts at HSBC also agreed that gold demand in China could struggle as investors buy more equities. However, they remain positive that gold demand will be strong enough to support prices.

“While China’s gold appetite may have eased from the white hot levels in 2013 and early 2014, we expect demand to remain a supportive factor for prices. There may be another, less bullish reason for the drop in imports,” they said in a report Tuesday.

They added that any stumble in equity markets could be bullish news as it would encourage investors to jump back into the gold market.


By Neils Christensen of Kitco News nchristensen@kitco.com
Follow Neils Christensen @neils_C



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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