(Kitco News) – China's November net gold imports from Hong Kong more than doubled from the prior month, while the return of price premiums also suggests the world's top gold consumer is getting back into gold in a big way.
China imported a net 33.074 metric tons of gold in November, the Hong Kong Census and Statistics Department announced on Monday. This represents a 115% increase from the 15.414 tons recorded in October and is the highest level of net imports since April 2024.
Total gold imports via Hong Kong were up 60% to 45.22 metric tons from October, their highest level in eight months.
China is the world's leading consumer of gold, and its purchasing activities can significantly influence global gold prices.
China's central bank also resumed buying gold for its reserves in November after a six-month pause.
“The People’s Bank has started reporting fresh purchases and it could be that there has been some import for official sector purchases,” StoneX analyst Rhona O'Connell told Reuters. “More likely, it is continued interest in bars and coins, and some improvement in jewellery demand.”
Gold exports from Switzerland also rose in November on rising demand from India, China and Hong Kong compared with October, according to Swiss customs data.
Last week also saw Chinese gold premiums on the rise once again as consumers began making purchases ahead of the Lunar New Year festivities at the end of January.
With many market participants predicting Asian gold prices will soon become the global benchmark as the continent represents an ever-increasing share of the global market, China’s price premiums provide important insight into the metal’s future performance, according to precious metals specialist Levi Donohoe.
“2024 has been a tale of two halves for the Chinese market, which is unsurprising given that the gold price has rallied 30% during the calendar year,” Donohoe wrote in InvestingHaven.com.
“This has had a significant impact on Chinese premiums as the beginning of the year saw Chinese prices trading higher than world prices, yet the mid-point of the year saw a reversal of this, leading the Chinese gold price to trade at a discount,” he said. “Data from early December 2024 shows signs of the premium coming back into the Chinese market with gold prices in China surpassing global benchmarks by $4.4/oz on December 20 2024, following months of discounts as deep as $40.6/oz in October.”
Donohoe said this shift represents the first sizeable premium since mid-August, and he believes gold’s recent consolidation has given buyers the confidence to reenter the market.
The Chinese gold market consistently traded at a significant premium during the first quarter of 2024, but prices moderated over the summer, and by late July, the yellow metal was trading at a discount.
“From September to November, the Chinese gold market experienced sustained discounts, hitting a low of -$40.6/oz on October 9” at a time when the price was setting new record highs, he said. “This shows evidence that Chinese buyers are extremely price sensitive and that the rising prices were causing buyers to be cautious in case of a price correction.”
But December has shown strengthening demand, and the yellow metal is once again trading at a premium on the mainland.
“The rebound in buying is likely to be due to a small dip in prices from record highs as well as early seasonal buying ahead of the Chinese New Year,” he added.
Donohoe pointed to two factors that he believes are driving premiums higher.
The first is seasonal demand. “With the Chinese New Year on 29 January 2025, it provides buyers with a small window to make their purchases,” he said. “It is possible that Chinese investors are seeing the recent dip in prices as ‘less risky’ time to buy. As demand recovers, so does the price premium.”
The second factor is economic sentiment. “Speculators could be increasing their gold holdings in China as they brace for Donald Trump’s presidency in the US,” Donohoe said. “Trump has a history of applying tariffs on Chinese imports and has been vocal about his intentions to use these again in his upcoming term. Whilst this will not impact the flows of gold into China, it increases the uncertainty of the Chinese economy going forward, which will naturally cause some to want more exposure to the safe haven asset.”
“Now, what’s interesting, looking at the long term gold price chart, is the number of consecutive ‘green’ candles (represented in white on below quarterly candlestick chart),” he said.
Donohoe noted that gold experienced four consecutive quarters of gains. “The Chinese dip came right at the top of the long term rising wedge, which is a potential bearish pattern (it’s not confirmed yet, and it’s easy that it invalidates as explained in the commentary on the chart). Moreover, the dip in Chinese demand (with falling gold premiums in China) occurred right at the highs of the previous quarterly candle (highs in Sept/Oct), when hitting $2,700 which is a crucial gold price level.”
He believes the return of Chinese premiums is a bullish signal for the global gold market as a whole.
“Rising Chinese premiums could indicate a recovery in demand, supporting higher global gold prices in the near term,” Donohoe said. “Chinese investors are thought of as shrewd buyers and so if they are seeing the recent dip in gold prices as a buying opportunity, this may become a wider trend in the global economy which provides fundamental justification for our long-term bullish view on the precious metal.”
