China's Gold Imports From Hong Kong Slump to Lowest Since 2011

  • Net purchases drop after surging to two-year high in December
  • Depreciation of China's offshore yuan slowed in January

China’s imports of gold from Hong Kong slumped to the smallest since 2011 in January after surging to the highest level in more than two years in December, as global prices climbed the most in a year.

Net purchases by the world’s largest consumer fell to 17.6 metric tons from 111.3 tons in December and 71.6 tons in the same month last year, according to data from the Hong Kong Census and Statistics Department compiled by Bloomberg. The mainland bought 37.4 tons, including scrap, while shipments to Hong Kong were 19.8 tons. Mainland China doesn’t publish the data.

Gold prices in London climbed 5.4 percent in January as investors sought a haven from turmoil in global financial markets, the biggest increase since January last year. Net imports had surged 67 percent in December from a month earlier amid concerns that the Chinese currency would continue to weaken. The depreciation of the offshore yuan slowed in January from the last two months of 2015.

“China’s interest in buying gold from Hong Kong cooled a lot last month because of exchange rate factors, and purchases in December were so high that they probably anticipated demand in January,” Wang Rong, an analyst with Guotai & Junan Futures Co. in Shanghai, said by phone on Thursday.

Swiss Exports

The decline in January was foreshadowed by Swiss shipment data. Exports from the European country to China fell to 43.4 tons in January from 57 tons a month earlier, while deliveries to Hong Kong dropped by more than half to 25 tons from 71.6 tons, according to data from the Swiss Federal Customs Administration.

While imports slumped in January, the outlook for demand may be strong. Consumption will keep expanding as investors seek safe assets and jewelry buying increases, the China Gold Association said this month. Usage climbed 3.7 percent to 985.9 tons in 2015 from a year earlier, the group estimates.

Demand for bars and coins in China jumped 25 percent in the fourth quarter from a year earlier, and was up 21 percent for the year with currency weakness a key driver, the World Gold Council estimates. Banks and retailers are confident physical demand will remain healthy, it said. Consumers in China and India will probably buy more this year as stock volatility and growth concerns boost bullion’s appeal as a store of value, it said.

— With assistance by Alfred Cang

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