- Gold prices ended November relatively unchanged despite sharp intra-month moves1
- The average Chinese gold price premium in the month witnessed a sharp fall despite robust physical gold demand in China2
- Holdings in Chinese gold ETFs fell by 6t (US$0.3bn, RMB2bn) in November after five consecutive months of inflows,3 reaching a collective AUM of 68t (US$4bn, RMB25bn )
- Wholesale physical gold demand has been strong so far in Q4: gold withdrawals from the Shanghai Gold Exchange (SGE) in November rose m-o-m and October’s gold imports reached the highest since December 2019.
- Inflationary concerns, a lowering opportunity cost and seasonality could all be supportive of future retail physical gold investment demand
- In the coming months, continued popularity of Heritage gold jewellery and an increasing focus among retailers on selling chunkier products, together with seasonal strength, might partially offset headwinds arising from recent economic growth slowdown and a reduction in the number of marriages.4
The Shanghai-London gold price spread fell amid a weaker local gold price
The LBMA Gold Price PM finished November slightly higher as declines towards the end of the month wiped off earlier rallies. While the LBMA Gold Price AM in USD – which we normally use when comparing to the Chinese local gold price ‒ increased by 0.1%, the SHAUPM in CNY saw a minor drop of 0.3%. The appreciating CNY against the dollar and a steadily rising equity market may have contributed to the underperformance of the RMB gold price.
The relatively weaker local gold price in China resulted in a dip in the Shanghai-London gold price spread last month despite robust wholesale physical gold demand. The local gold price premium averaged US$3/oz last month, compared with US$7/oz in October. More detailed demand analysis can be found here.
The local gold price premium fell in November
The average monthly spread between SHAUPM and LBMA Gold Price AM in US$/oz*