Chinese will buy less gold this year

Chinese people have bought much less gold this year than last year, according to New figures of the China Gold Association. In the first six months of this year, they bought 323.29 tonnes of gold, a decrease of 38% compared to the same period last year. Demand for the precious metal fell due to the strict lockdown measures, which forced jewellers to close their doors. In addition, a rising gold price curbed the appetite of Chinese consumers to buy. In the second quarter, the Chinese gold market picked up somewhat, but not enough to compensate for the poor first quarter.

The latest quarterly report of the World Gold Council confirms this trend. In important markets such as China and India, consumers kept their hands on the purse strings. As a result, the demand for both jewellery and investment gold decreased. Due to the high Gold price Consumers postponed the purchase of jewellery, while selling more gold due to the deteriorating economic situation. This created a surplus in the local gold market, causing traders to offer the precious metal below the international rate.

Cheaper gold in India and China

Due to a drop in demand, there has been a surplus of gold in India and China, causing traders to sell the precious metal offer at a discount. In China, the price of a troy ounce of gold is currently almost $40 below the international gold rate. In India, too, gold is leaving at a lower price. The difference with the spot price in London is about $10 per troy ounce. The image of a surplus of gold in this market is also reflected in international trade flows. Figures from Swiss customs show that Switzerland has not exported gold to India and China in recent months. Normally, these countries are the most important markets.

We see the opposite picture in Western economies. In the United States and Europe, the precious metal has been in short supply in recent months, resulting in longer delivery times and higher premiums. This is also reflected in the international gold flows. For example, an exceptional amount of gold has recently been going to important hubs such as New York and London. Russia even exported a Record amount of gold to the United Kingdom. Due to the large price difference, China has changed its export rules for gold Relaxed.

Premium on gold in China

Premium on gold in India

This contribution was made from Geotrendlines