- Gold prices were strong in April: the Shanghai Gold Benchmark PM (SHAUPM) in renminbi (RMB) and the LBMA Gold Price AM in US dollars rose by 5.1% and 7.7% respectively1
- With the COVID-19 outbreak being effectively contained and accommodative monetary and fiscal policies, China’s economy in April rebounded further
- While Chinese investors’ tactical positioning in Au(T+D) fell due to the lower gold price volatility in April, their allocation to gold ETFs kept increasing on the bullish gold price momentum
- In April, Au9999’s trading volumes and gold withdrawals from Shanghai Gold Exchange (SGE) rose further; jewellers were actively preparing for the widely expected gold consumption spikes such as the Labour Day Holiday and Mother’s Day in early May
- Higher retail gold bullion sales, disruptions in gold supply chains in Western markets, as well as still soft Chinese consumer demand led to the widest local gold price discount since 2002 – when the SGE was established – in April2
- The People’s Bank of China (PBoC) kept its gold reserves unchanged at 1,948t in April, accounting for 3.5% of total reserves.
Economic uncertainty and lowered opportunity cost of holding gold lifted gold prices in April. As the COVID-19 outbreak continued last month, economic pressure in major economies and central banks’ monetary policy stance in response pushed international gold prices up by almost 8%. But the reviving Chinese economy and an appreciating CNY against the US dollar have led to a relatively weaker RMB gold price performance – 5% – by comparison