Metals Focus: Swiss Data Point To Soft Gold Demand In Many Markets
Switzerland is a major gold-refining hub, thus the country’s trade statistics are closely monitored as a barometer for global physical demand.
Switzerland’s gold exports rose by 2% year-on-year to 478 tonnes from January through April.
“However, this growth is almost entirely driven by robust growth in China. Excluding that country, Swiss exports were actually down by almost a third,” Metals Focus said in a report released Wednesday.
Further, combined shipments to Hong Kong and mainland China were 43 tonnes in April, down by 46% from the prior month and the lowest level since October, Metals Focus said.
During the first four months of 2018, Swiss exports to the region totaled 172 tonnes, up 65% year-on-year, Metals Focus said. However, the consultancy explained, the “dramatic” rise was due to a weak comparison level from a year ago.
“It is worth stressing that part of these gains came as a result of the tightening regulations on gold bullion imports imposed by the Chinese central bank in 2017, which led to a temporary slowdown in Chinese imports early in the year,” the consultancy continued.
One positive for physical gold demand, however, is that Chinese gold-jewelry consumption has picked up, analysts said. First-quarter buying was 7% higher than the same period a year ago.
Meanwhile, Swiss gold exports to India totaled 80 tonnes from January to April, which Metals Focus noted was less than half of the total from the same period in 2017.
“A number of factors contributed to this hefty fall. First, Indian bullion imports in H1.17 were boosted by stock replenishments by the trade ahead of the introduction of the GST [goods and services tax],” Metals Focus says. “Second, both jewelry sales and retail investment posted lower volumes in Q1.18.
“That said, feedback from the industry has confirmed a pick-up in demand in April, while the local market also moved to a modest premium over the London price. Indeed, most jewelers we recently spoke to confirmed higher sales y/y on Akshaya Tritiya, one of the most auspicious days to buy gold in India.”
Swiss shipments to other key physical gold markets have been generally lower so far this year, Metals Focus said. Weakness in the Middle East was the result of poor economic conditions, and there has been softer demand for gold bars among European retail investors, the consultancy said.
“Finally, it is worth noting that Swiss exports to the U.K. remained low at 7 [tonnes], highlighting lackluster interest in the yellow metal among institutional investors,” Metals Focus said.
Metals Focus also noted that January-April imports into Switzerland were down by over 30% from the prior year to 443 tonnes.