(Kitco News) - The global shift in the gold market continued unabated in January as trade data from Switzerland showed robust flows of the precious metal to Eastern nations.
In its latest trade report, Switzerland said that 207 tonnes of gold were exported from Europe’s largest refining hub to China, India and Hong Kong. According to reports, gold exports out of Switzerland reached an eight-year high.
“Shipments to India rose 73% to 14 tons, to China it more than doubled to 77.8 tons, to Hong Kong it rose almost 7x to 44.6 tons,” said commodity analysts at MKS PAMP Group in a note Tuesday.
Commodity analysts note that Chinese imports were fueled by unprecedented jewelry demand ahead of “Year of the Dragon” Lunar New Year celebrations. At the same time, analysts have also said that more and more Chinese consumers and investors are turning to gold to protect their wealth, hedging against slowing economic weakness and financial market turmoil.
The trade data from Switzerland provides further evidence of China’s ravenous demand for gold. Earlier this month, the Shanghai Gold Exchange reported 271 tonnes of gold withdrawn from the market in January, the busiest start to the year on record and the second highest in the exchange’s history.
In a report published last month, commodity analysts at BMO Capital Markets said that Chinese demand is an underappreciated asset and has helped gold prices consolidate above $2,000 even as the Federal Reserve looks to maintain its restrictive monetary policies for the foreseeable future.
“With the correlation of gold to real rates now broken, we are looking at a new era for gold. In our view, this looks to be defined by one macro factor — price-insensitive central banks — and one micro factor — Chinese household asset allocation,” the analysts said in the report.
It’s not just gold benefiting from robust demand from Eastern nations. Commodity analysts at TD Securities noted that Chinese and Indian consumers are buying silver as quickly as they can.
TDS said that since the Lunar New Year Celebrations, traders in Shanghai have bought 450 tonnes of silver.
“This adds to the massive 650t of imports from India over the course of January and highlights that substantial buying activity in the East has now offset macro trader short positions tied to the recent string of hot data,” the analysts said.
TD also said that growing bearish speculative positioning in the current environment makes the silver market ripe for a potential short squeeze.
