China’s Gold Imports Fall for Second Month Before Rate Increase

China’s net imports of gold from Hong Kong dropped for a second month in November as investors were deterred by bearish prospects for prices amid rising U.S. interest rates.

Net purchases declined to 66.8 metric tons from 68.2 tons in October and 87.2 tons a year earlier, according to data from the Hong Kong Census & Statistics Department compiled by Bloomberg. The mainland bought 103.1 tons, including scrap, compared with 87.8 tons a month earlier. Exports to Hong Kong were 36.3 tons from 19.7 tons. Mainland China doesn’t publish the data.

Demand weakened amid expectations that the U.S. would raise benchmark borrowing costs for the first time in almost a decade, a move since confirmed, and continue with gradual increases during 2016. Higher rates hurt gold because the metal doesn’t pay interest. The outlook for increases means bullion could drop to $950 an ounce by end-2016, according to Barnabas Gan, an economist at Oversea-Chinese Banking Corp. Prices fell 6.8 percent in November, the most since 2013.

“The market in November seemed to assign a high probability to a U.S. interest rate hike and investors were hesitant to buy,” Xu Wenyu, an analyst at Huatai Futures Co., said before the data were released. “The consensus was that the price would probably remain low.”

Shipments from Switzerland to China dropped to 16.5 tons in November from 29 tons a month earlier, according to data from the Swiss Federal Customs Administration.

— With assistance by Feiwen Rong

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