(Kitco News) - The World Gold Council (WGC) has released the latest ETF investment figures from China. Outflows from Chinese gold ETFs continued last month as total assets under management (AUM) in Chinese gold ETFs reduced by 1.8t (US$143mn, RMB0.8bn), to 56.7t (US$3.4bn, RMB22.7bn) in May.
COVID restrictions in Shanghai eased and various stimuli were rolled out by the Chinese government and central bank. This meant local investor risk appetite improved the CSI 300 Stock Index saw its first monthly gain this year, and this has led to a decline in local investor demand for safe-haven assets such as gold.
The report said "As the COVID resurgence in China calm down and related restrictions in various regions eased, wholesale physical gold demand started to recover. Gold withdrawals from the SGE saw a 19t rebound M/M, totaling 103t in May. And on a Y/Y basis, they were 2t lower than May 2021."
As policymakers rolled out various stimulus measures to stabilise China’s economic growth. These measures may have shored up jewellery retailer and manufacturer confidence, contributing to higher gold withdrawals in the month.
In numbers, China imported 27t of gold in April, 21t lower M/M, and 84t less than in April 2021. Weakened gold demand amid strict lockdowns in key regions, including Shanghai, and a negative Shanghai-London gold price spread in April both weighed on gold imports in the month.
Lastly, the report noted, "as China gradually recovers from the most recent COVID hit and as stimulus measures gather pace, we expect Chinese gold consumption to improve over the coming months. A weakening currency, rising inflationary pressures and lower bond yields may help raise investor interest in gold investment products. And we believe a stable gold price and pent-up wedding demand could also benefit gold jewellery consumption"
