FOCUS – Chinese gold demand slows slightly, buyers well stocked – Macquarie

London 29/10/2013 – Chinese gold demand slowed in September, possibly because buyers were well stocked after buying in sizeable volumes in the preceding months and because of the Golden Week holiday last month, which reduced the number of trading days, Macquarie Research said in a report.

Chinese imports of gold from Hong Kong weakened slightly in September but remained strong at more than 100 tonnes, it said. Although net imports into China last month at 112 tonnes were down from 125 tonnes in August, that total is still nearly 60 tonnes higher than the September 2012 figure, a rise of around 114 percent.

Still, data from the Shanghai Gold Exchange (SGE) suggests Chinese demand has slowed into the end of October. Turnover on SGE, which tallies closely with its physical deliveries of gold, picked up late last month in line with falling gold prices but has fallen this month.

SGE turnover last week averaged 5.5 tonnes per day, its weakest since early April, which Macquarie attributed partially to the modest recovery in the gold price in recent weeks. Spot gold was last at $1,345.40/1,346.20 per ounce, down $7.45 on the Monday’s close but is still more than $90 higher than the mid-month low of $1,251.50 on October 15.

Macquarie sees a “non-price related weakening of Chinese appetite for gold”, believing that the fall in imports last month may be the result of buyers being well stocked – imports averaged 119 tonnes per month between February and August – and because there were fewer trading days in September – at 16 compared with August’s 22 – due to a national holiday.

The slowing of turnover on the SGE at the end of October suggests that “demand is weakening, but slowly”, Macquarie added.

Still, demand could improve into the end of the year, which could have a “positive impact” on prices, it said.

(Editing by Mark Shaw)

Eddie van der Walt

About Eddie van der Walt

London-based, South African-born metals markets reporter, currently focusing on precious metals and the London Metal Exchange. All that glitters must be sold. Twitter: @EvdW