- The Shanghai Gold Benchmark Price PM (SHAUPM) (RMB) rose 3.8% and the LBMA Gold Price AM (USD) was up by 5%1
- In view of the imbalanced economic recovery, Chinese policy makers will continue to prioritise the stimulation of domestic demand
- Investment demand in gold fell amid lower safe-haven needs:
- trading volumes of Au(T+D) on the Shanghai Gold Exchange (SGE) and gold futures on the Shanghai Futures Exchange (SHFE) both dropped on a m-o-m basis
- collective holdings in Chinese gold ETFs saw a 2t (US$81mn, RMB268mn) outflow in the month
- Gold withdrawals from the SGE were seasonally lower m-o-m but higher than the 10-year average of April loadouts
- The Shanghai-London gold price spread saw a slight m-o-m rise in April, averaging US$11/oz2
- The People’s Bank of China gold reserves remained at 1,948t at the end of April, accounting for 3.3% of its total reserves; the Chinese central bank has kept its gold reserves unchanged since September 2019
- China’s gold imports in March rebounded significantly both m-o-m and y-o-y3
- We are likely to see strong retail gold consumption in May.
International gold prices rebounded in April. Primarily, the sharp fall in real yields across key regions, along with the weakening dollar amid the Federal Reserve’s dovish policy stance, lifted the USD gold price.4 In addition, inflation expectations continued to intensify during the month, contributing to the rebound in gold prices.
Within China, however, relatively stable government bond yields, lower inflationary concerns and a strong currency limited upside potential for the local gold price – the SHAUPM had a smaller price increase than its US dollar peer.