Stampede for gold in China

Gold exports to China have exploded in the run-up to the Chinese New Year, according to trade data from Switzerland and Hong Kong. Swiss Customs Registered in December, 158 tonnes of gold were exported to China, more than four times as much as the monthly average of recent years. Imports from Hong Kong rose to a net 47 tonnes in December from a net 40.6 tonnes in November.

This weekend, according to the Chinese calendar, the Year of the Rooster begins, a festive occasion in which a lot of gold is also bought to give as a gift to friends and family. But that is not the only reason for the explosive rise in gold imports. The development of the gold price also played a significant role at the end of last year.

Drop in gold price

After Donald Trump's victory in November and in the run-up to the Federal Reserve's interest rate hike, the price of the precious metal began to fall. Gold prices bottomed out at around $1,120 per troy ounce in mid-December, the lowest level in nearly eleven months. That was reason enough for many Chinese to stock up on some extra precious metal.

"The market has improved significantly compared to the third quarter. This can largely be explained by the fall in the price of gold. Traders were cautious when prices were higher, so there is some demand that needs to be made up"Nikos Kavalis, an analyst at Metals Focus, told Bloomberg.

Chinese gold imports explode ahead of Chinese New Year (Source: Bloomberg)

Chinese gold market

The Chinese gold market is according to figures from research agency Metals Focus the largest market for physical gold in the world. Also, there is no other country in the world that imports or extracts more gold from its mines than China. According to figures from the China Gold Association, the demand for gold last year was about 6.7% lower than in 2015 at 975 tonnes.

The year 2016 was the best year for the precious metal since 2011. Turmoil in the financial markets, a further fall in interest rates and increasing political uncertainty caused the gold price to rise by 8.5% in dollars and 12% in euros. In China, the Gold price even by 16.3%, as the Chinese currency depreciated more than 5% against the dollar last year.