China’s gold imports from Hong Kong plunged 62 percent in December from a record as retail and jewelry-maker demand declined amid a seasonal slowdown.
The mainland bought 38.8 metric tons from Hong Kong, down from November’s 102.8 tons, the highest ever, Hong Kong’s Census and Statistics Department said yesterday. China doesn’t publish gold trade data.
Bullion for immediate delivery dropped 10 percent in December as the dollar gained 2.3 percent against a six-currency basket, reducing demand for precious metals as alternative assets. Demand had climbed in China as rising incomes and concerns about inflation bolstered purchases, with the country overtaking India in the third quarter as the largest gold jewelry market, according to the World Gold Council.
“Retail demand for gold tapered off along with the decline in prices,” Wang Xinyou, a senior analyst at Agricultural Bank of China, said by phone from Beijing today. “Seasonal stockpiling of raw material by jewelry makers also dwindled.”
Cash bullion advanced as much as 0.3 percent to $1,724.65 an ounce today and traded little changed at $1,720.48 at 12:24 p.m. Singapore time. The price rose to an all-time high of $1,921.15 on Sept. 6 as a worsening sovereign-debt crisis and a slowing global economy stoked demand for a store of wealth.
“A drop in prices may trigger bargain-hunting and a price rally may spur investor interest,” Wang said. “Demand will perhaps stay weak if gold prices keep fluctuating between $1,600 and $1,700 an ounce.”
Gold output in China, the largest producer, jumped 32 percent in December to 83 tons, the National Bureau of Statistics said Jan. 17.
“It’s a more realistic figure of the state of physical demand towards the end of the year when it appeared that there was enough local gold on the ground to meet demand, hence less of a need for the same chunky imports,” said Edel Tully, an analyst at UBS AG in London. “The historical data shows that imports in December are typically less than the previous month.”