Gold shipments to China from Hong Kong rose in October to the second-highest on record as jewelers and retailers bought the metal to build up inventories ahead of a peak-demand season at the end of the year.
Net imports, after deducting flows from China into Hong Kong, were 129.9 metric tons in October, from 109.4 tons in September, according to calculations by Bloomberg based on data from the Hong Kong Census and Statistics Department. Purchases reached an all-time high of 130 tons in March, with the amount in the first 10 months of 2013 more than doubling to 955.9 tons from a year earlier, the data show.
China is on course to overtake India as the world’s biggest bullion consumer, with demand poised to reach 1,000 tons this year, according to the World Gold Council. Gold has climbed 5.2 percent from a 34-month low in June as the price drop spurred demand for jewelry, coins and bars in Asia, even as other investors reduced holdings in exchange-traded products.
“It’s a strong number and it certainly puts China on track to import more than a thousand tons,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “You do get the usual seasonal pickup towards the last quarter of the year, but a lot of the Chinese were also taking advantage of prices that have been coming off.”
Gold for immediate delivery in London rose 0.2 percent to $1,245.67 an ounce at 12:58 p.m. Beijing time. It’s lost 26 percent this year, tumbling to $1,180.50 on June 28, the lowest since July 2010, as holdings in ETPs slumped 30 percent on prospects for a global economic recovery. Bullion of 99.99 percent purity, China’s benchmark spot contract, fell 1.2 percent in October on the Shanghai Gold Exchange, dropping for a second month.
China’s demand for jewelry, bars and coins rose 30 percent to 996.3 tons in the 12 months through September, while usage in India gained 24 percent to 977.6 tons, according to the London-based WGC. Consumption that may ease 2.4 percent in 2014 from a record 1,000 tons in 2013, according to a Bloomberg News survey, still points to purchases greater than any other nation and more than the U.S., Europe and the Middle East combined.
When bullion tumbled into a bear market in April, images in Chinese media showed Chinese consumers clearing shelves in gold shops. Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain, yesterday reported profit for the six months ended Sept. 30 that almost doubled on Chinese demand.
Mainland buyers purchased 147.9 tons last month, including scrap, compared with 116.3 tons a month earlier, data from the Hong Kong government showed. China’s purchases in October were three times higher than the 47.5 tons a year earlier, according to the Hong Kong data. Mainland China doesn’t publish such data.
“Some banks may have brought in shipments to fill their import quota before the end of the year as any unused quota may result in a reduction by the central bank next year,” said Wang Xinyou, head of precious metals division at Agricultural Bank of China in Beijing. Only qualified banks that secure quotas from the People’s Bank of China can import gold to the mainland.
Exports to Hong Kong from China were 18 tons in October, according to a separate statement from Statistics Department. That compares with 6.9 tons in September and 23.6 tons in October 2012.
— With assistance by Feiwen Rong, and Glenys Sim