Insights

Despite June weakness, the LBMA Gold Price AM in USD and the Shanghai Gold Benchmark PM (SHAUPM) in RMB ended the first half of 2023 higher by 5% and 9% respectively – the depreciation of RMB against the dollar over the period contributed to the significant difference.

Gold prices failed to extend the momentum of the previous month. Factors such as a strong dollar and rising yields weighed on the USD gold price in the month. But due to a 3% depreciation in the local currency against the dollar, the SHAUPM in RMB strengthened.

Key highlights:

• The LBMA Gold Price AM in USD rose by 0.2% in April while the Shanghai Gold Benchmark PM (SHAUPM) in RMB saw a 0.7% gain, due mainly to a depreciating RMB against the USD 
• The average Shanghai-London gold price premium fell sharply in April amid easing local supply and demand conditions

Your monthly update on gold in China covering gold prices, wholesale demand, central bank buying and more. 

Gold prices weakened in February. There was a 5% decline in the LBMA Gold Price AM in USD during the month. Meanwhile, due to a 3% depreciation in the RMB against the dollar, the SHAUPM in RMB saw a smaller fall of 1%

Gold prices kicked 2023 off to a strong start. The SHAUPM in RMB registered a 2% gain in January and the LBMA Gold Price AM in USD rose by 5%.

Intensifying expectations of a less-hawkish US Fed bode well for international gold prices during the last month of 2022. While the SHAUPM in RMB rose 1% in December, the LBMA Gold Price AM in USD capped a 3% gain.

The divergence between the RMB and USD gold prices widened. The weakening US dollar and lowering yields helped pushed the LBMA Gold Price AM in USD 7.4% higher in November, the best month since July 2020.

Gold’s price divergence continued: the Shanghai Gold Price Benchmark PM (SHAUPM) in RMB rose by 1%, while the LBMA Gold Price AM in USD saw a 2% fall in October.

The Shanghai Gold Price Benchmark PM (SHAUPM) in RMB rose by 0.5% in August while the LBMA Gold Price AM in USD saw a 2.6% fall. The average Shanghai-London gold price spread climbed further in the month, driven by stronger demand  

The Shanghai Gold Price Benchmark PM (SHAUPM) in RMB and LBMA Gold Price AM in USD both trended down in June. 

Gold prices fell in May. Primarily driven by negative momentum impacts as well as lower risk and uncertainty, the SHAUPM in RMB and the LBMA Gold Price AM in USD fell by 1.8% and 3.2% respectively in the month.

The Shanghai Gold Price Benchmark PM (SHAUPM) in RMB rose in April while the LBMA Gold Price AM in USD saw a slight decline.

Due to fewer working days in the month and manufacturers’ active replenishing ahead of the Chinese New Year (CNY) holiday, gold withdrawals from the Shanghai Gold Exchange (SGE) in February fell m-o-m.

China’s gold consumption boomed during the CNY holiday. A lower local gold price and freed-up travel budgets – due to COVID outbreaks in different regions – might have spurred consumer interest in gold products, especially Heritage gold jewellery and tiger-themed items.

The Chinese central bank has intensified its easing monetary policy efforts to accommodate the nation’s slowing economic growth.

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.

After five consecutive monthly inflows, collective holdings in Chinese gold ETFs reached 74t (US$4bn, RMB27bn) at the end of October, the highest AUM on record in tonnage terms. We cover this and more in our monthly blog on China's gold market. 

Gold prices fell in September. The LBMA Gold Price AM in USD and the Shanghai Gold Benchmark Price (PM) in CNY declined by 4.6% and 4.3% respectively last month. The rising interest rate, outflows from global gold ETFs, and a stronger dollar all contributed to gold price weaknesses in September.