- Gold prices capped further gains in May as rising economic and geopolitical uncertainties lifted investors’ safe-haven demand. The Shanghai Gold Benchmark PM (SHAUPM) in renminbi (RMB) and the LBMA Gold Price AM in US dollars both reached multi-year highs1
- Benefitting from various accommodative fiscal and monetary policies, China’s economy in May remained stable
- The bullish gold price momentum and rising safe-haven demand have boosted gold’s popularity among tactical and strategic investors: Au(T+D)’s daily trading volumes y-t-d rose by 61% y-o-y, and Chinese gold-backed ETF holdings have increased by 36% so far this year
- In May, Au9999’s trading volumes and gold withdrawals from the Shanghai Gold Exchange (SGE) fell; gold retailers’ inventory replenishment ahead of the early May shopping festivals and their expectation of lower sales in June, the traditional off season for jewellery demand, led to the decline in China’s wholesale gold demand last month2
- With gold consumption in China rising notably and supply disruption easing in the Western market in May, Chinese local gold price discount narrowed3
- The Peoples Bank of China (PBoC) kept its gold reserves unchanged at 1,948t in May, accounting for 3.4% of total reserves
Gold prices continued to rise in May amid economic and geopolitical uncertainties. During the month, gold prices continued to respond to persistent economic and geopolitical uncertainties. For instance, the deterioration of US-China relations in May is threatening the phase one trade deal between the two countries.4 Meanwhile, major economies are still facing economic challenges brought about by the COVID-19 pandemic. Driven by higher safe-haven demand, SHAUPM in RMB and the LBMA Gold Price AM in USD were up by 3.03% and 3.43% respectively in the month.