- The LBMA Gold Price AM (USD) declined by 4.5% and the Shanghai Gold Benchmark Price PM (SHAUPM) (RMB) dropped 3.2%in March1
- China’s economy started 2021 with a strong Q1
- Au(T+D)’s trading volumes dropped significantly in March, yet Chinese gold ETF holdings set a new record:
- Au(T+D)’s trading volumes in the month totalled 836 tonnes (t), 3,099t lower y-o-y despite a 255t m-o-m rebound
- Chinese gold ETF holdings increased by 5.3t (US$287mn; RMB1.9bn) in the month, reaching 72.4t (US$3.9bn; RMB25.8bn) in collective holdings, the highest on record
- Gold withdrawals from the Shanghai Gold Exchange (SGE) in March were 82% higher m-o-m and 104% higher y-o-y
- In March, the Shanghai-London gold price spread rose to US$10.2/oz on average, US$3/oz (42%) higher m-o-m2
- The People’s Bank of China gold reserves remained at 1,948t at the end of March, accounting for 3.2% of its total reserves. The Chinese central bank has kept its gold reserves unchanged since September 2019.
- As we enter Q2, the off season for Chinese gold consumption, China’s wholesale gold demand in April could face challenges
Rising real rates continued to weigh on gold prices in March. Real yields in key regions climbed further – representing an opportunity cost to hold gold and reflecting improved economic conditions in these markets, as well as investor expectations of higher inflation to come. Our short-term gold performance attribution model also suggests that the rising opportunity cost of holding gold last month was a major contributor to the subdued gold prices.