Chinese New Year: what does it mean for China’s physical gold market?
On 25th January 2020, people throughout China will celebrate the start of a new year – the most important festival in the Chinese lunar calendar. This will kick off Year of the Rat and begin another rotation of the twelve zodiac signs. Most people are already in a festive mood, and, as a result, so is China’s gold market.
The first exchange-traded gold option in China
China’s first exchange-traded gold future’s option was listed on 20th December 2019 on the Shanghai Futures Exchange (SHFE). While gold options already existed in China, these were traded over-the-counter (OTC) on the OTC market platform at the Shanghai Gold Exchange (SGE) and linked to physical gold products.
Gold investment jumps on spike in global political tensions
Gold has long been recognised as a safe haven, an asset that investors seek out for protection and security during uncertain times... That certainly seems to have been borne out over the last week, with gold reaching a seven-year high.
Gold-backed ETF holdings reached all-time highs in 2019
Takeaways from 2019 Annual Precious Metals Conference
Co-hosted by China Gold Association, World Gold Council, Shanghai Gold Exchange, Shanghai Futures Exchange and the Shanghai Gold and Jewellery Association, the 2019 Annual Precious Metals Conference was held in Shanghai on 10th and 11th December. Over 400 gold industry leaders and representatives from China and other regions participated. Here are a few key takeaways.
Stocking up for Chinese New Year drove wholesale physical gold demand in November
Summary
- The Shanghai Gold Benchmark price (PM) extended its decline in November. The appreciating USDCNY has again made CNY-denominated gold prices weaker than the dollar gold price, resulting in another drop in local gold premium last month.
- Driven by elevated price volatility, Au(T+D)’s trading volume was higher m-o-m. Meanwhile, the industry’s stocking ahead of the Chinese New Year’s Festival led to a higher Au9999 trading volume and gold withdrawals from the Shanghai Gold Exchange (SGE) in November. • During the first ten months of 2019, China’s gold imports dropped by 41% y-o-y.
- While some investors have stepped away, Chinese gold ETFs’ gold holdings stabilised around the highest level since last October.
- The People’s Bank of China (PBoC) left its gold reserve unchanged at 1,948t in November.
Wedding season revives gold demand in November a little – but the market is still soft
Summary
- Indian gold imports were 62.3t in October 2019 – 11% lower than the same month last year
- The domestic gold price declined by 2% in November, ending the month 20% higher than the end of 2018
- With the onset of the wedding season in November, the local market was back in premia of US$1/oz on 6th November after trading at discount for more than five months, but lower than expected wedding volumes pushed the market back into discount by end of November
- Late withdrawal of the monsoon, with heavy rainfall in several states of India, damaged kharif crops, leading to more than 50% of kharif crops trading below the minimum support price (MSP) due to high moisture content and little progress in procurement of crops from government . This will impact rural income in Q4 2019
Hard-pure gold jewellery in China: calling for standards
The discovery of the process to harden pure gold has formed the foundation for all innovative pure gold products and become an important feature favoured by consumers and jewellers... The hard-pure gold jewellery market is booming but lacks an industry standard defining these products and providing industry guidance.
The World Gold Council China team has been working with the National Jewellery Standardisation Committee, industry associations and leading Chinese jewellers, to draft proper standards for hard-pure gold jewelleries.
