- The LBMA Gold Price AM in US dollars (USD) and the Shanghai Gold Benchmark Price PM (SHAUPM) in renminbi (RMB) dropped slightly1
- While the supply side of China’s economy continued to improve, recovery in demand was at a slower pace, leading to a notable decline in inflation
- With fewer trading days and reduced gold price volatility, Au(T+D)’s trading volumes fell further in October. Meanwhile, holdings in Chinese gold ETFs remained at record levels
- Wholesale physical gold demand in China fell m-o-m due to seasonal reasons: gold withdrawals from the Shanghai Gold Exchange (SGE) were 94t, 60t lower m-o-m but 3t higher y-o-y
- The Chinese local gold price discount continued to narrow as local gold demand maintained its recovery2
- The People’s Bank of China’s gold reserves remained at 1,948t, accounting for 3.6% of its total reserves.
Gold prices saw marginal declines in October. Even though the US presidential election and a significant rebound in COVID-19 infection cases in many regions kept uncertainty elevated globally, climbing real interest rates in key markets such as the US and China weighed on local gold prices. As a result, the SHAUPM (RMB) and LBMA Gold Price AM (USD) fell by 1.8% and 0.4% respectively in the month.
The continuous appreciation in RMB and a rising real rate in China driven by the nation’s strong economic revival after Q1 could be the main factors contributing to weaker performance in the RMB gold price relative to the USD gold price.