- Both the LBMA Gold Price AM in US dollars (USD) and the Shanghai Gold Benchmark Price PM (SHAUPM) in renminbi (RMB) ended the month lower, mainly due to strong performances in equity markets1
- China’s economic signals were mixed: while supply-side economic indicators continued to improve, demand showed a relatively slower recovery
- Au(T+D)’s volumes rose further due to the greater gold price volatility in early August. Chinese gold-backed ETFs’ total gold holdings increased by 4t in the month
- Wholesale gold demand in China rose in August as gold jewellery manufacturers were preparing for Chinese Valentine’s Day late in the month, and various promotional events during September2
- The Chinese local gold price discount recorded another record level of US$69/oz last month, as real rates in China and Western countries continued to diverge3
- The People’s Bank of China (PBoC) kept its gold reserves unchanged at 1,948t in August, accounting for 3.7% of its total reserves.
Bullish momentum in the gold price paused after it reached record highs in early August. Strong stock market performance, rising interest rates, and increased global economic activity created headwinds for the gold price. As a result, the LBMA Gold Price AM in USD and the SHAUPM in RMB fell 0.95% and 2.13% respectively in August. In addition, positive news around the development of a COVID-19 vaccine also raised optimism among investors.4
With RMB strengthening and Chinese Treasury yields rising further during the month – chiefly driven by the continued improvement in the domestic economy and policy makers’ prudent attitude towards monetary easing – the RMB-denominated gold price experienced a sharper decline than in USD.