Goldhub blog: Posts from December 2019

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Ray Jia
Research Manager
World Gold Council

Takeaways from 2019 Annual Precious Metals Conference

Co-hosted by China Gold Association, World Gold Council, Shanghai Gold Exchange, Shanghai Futures Exchange and the Shanghai Gold and Jewellery Association, the 2019 Annual Precious Metals Conference was held in Shanghai on 10th and 11th December. Over 400 gold industry leaders and representatives from China and other regions participated. Here are a few key takeaways.

Ray Jia
Research Manager
World Gold Council

Stocking up for Chinese New Year drove wholesale physical gold demand in November

Summary

  • The Shanghai Gold Benchmark price (PM) extended its decline in November. The appreciating USDCNY has again made CNY-denominated gold prices weaker than the dollar gold price, resulting in another drop in local gold premium last month.
  • Driven by elevated price volatility, Au(T+D)’s trading volume was higher m-o-m. Meanwhile, the industry’s stocking ahead of the Chinese New Year’s Festival led to a higher Au9999 trading volume and gold withdrawals from the Shanghai Gold Exchange (SGE) in November. • During the first ten months of 2019, China’s gold imports dropped by 41% y-o-y.
  • While some investors have stepped away, Chinese gold ETFs’ gold holdings stabilised around the highest level since last October.
  • The People’s Bank of China (PBoC) left its gold reserve unchanged at 1,948t in November.
Mukesh Kumar
Market Intelligence Group
World Gold Council

Wedding season revives gold demand in November a little – but the market is still soft

Summary

  • Indian gold imports were 62.3t in October 2019 – 11% lower than the same month last year
  • The domestic gold price declined by 2% in November, ending the month 20% higher than the end of 2018
  • With the onset of the wedding season in November, the local market was back in premia of US$1/oz on 6th November after trading at discount for more than five months, but lower than expected wedding volumes pushed the market back into discount by end of November
  • Late withdrawal of the monsoon, with heavy rainfall in several states of India, damaged kharif crops, leading to more than 50% of kharif crops trading below the minimum support price (MSP) due to high moisture content and little progress in procurement of crops from government . This will impact rural income in Q4 2019
Gerry Chen
Director, Trade Engagement
World Gold Council

Hard-pure gold jewellery in China: calling for standards

The discovery of the process to harden pure gold has formed the foundation for all innovative pure gold products and become an important feature favoured by consumers and jewellers... The hard-pure gold jewellery market is booming but lacks an industry standard defining these products and providing industry guidance.

The World Gold Council China team has been working with the National Jewellery Standardisation Committee, industry associations and leading Chinese jewellers, to draft proper standards for hard-pure gold jewelleries.

Juan Carlos Artigas
Director, Investment Research
World Gold Council

Key trends to watch as we conclude 2019

As 2019 comes to an end and 2020 begins, we believe that:

  • Financial and geopolitical uncertainty combined with low interest rates will likely continue supporting gold investment demand
  • Net gold purchases by central banks will likely remain robust even if they are lower than the record highs seen in recent quarters
  • Momentum and speculative positioning may keep gold price volatility high
  • Gold price volatility and expectations of weaker economic growth may result in softer consumer demand near term
  • But structural economic reforms in India and China will support demand in the long term.

Note: our comprehensive annual Outlook will be published by mid-January 2020.

Mukesh Kumar
Market Intelligence Group
World Gold Council

Dhanteras fails to boost gold sales in October

Summary

  • Indian gold imports were 38.3t in October 2019 – 15% lower than the same month last year
  • The domestic gold price rose by 3.1% during October, ending the month 22.4% higher than the end of 2018
  • With the festival of Dhanteras in October and onset of wedding season in November, the discount in the local market narrowed to US$3/oz by end of October from a discount of US$29.5/oz at end of September
  • Late withdrawal of the monsoon, with heavy rainfall in several states of India, damaged the kharif crops and more than 60% of kharif crops traded below the minimum support price (MSP) in October due to high moisture content and little progress in procurement of crops from government.
Dr Lu Zhengwei
Chief Economist of China Industrial Bank, Chief Economist of Huafu Securities and Vice Chairman of China Industrial Bank Research Limited

Currency crises, over-leverage and low rates – potential drivers of a gold bull market

The gold price has risen more than 15% this year against a backdrop of falling interest rates, economic uncertainty and geopolitical tensions. Dr Lu Zhengwei, Chief Economist of China Industrial Bank, Chief Economist of Huafu Securities and Vice Chairman of China Industrial Bank Research Limited, looks back in time to forecast the future for gold.

Krishan Gopaul
Market Intelligence Group
World Gold Council

Central bank demand remains healthy but showing signs of slowing

Our latest central bank data is now available on Goldhub and makes for interesting reading. Looking at the latest statistics on gold, monthly increases (of a tonne or greater) in gold reserves have begun to ease over the past three months. In October, reported net purchases totalled a healthy 41.8t, but this was 16% lower than September (49.6t), which itself was 16% lower than August (59t).