When we talk Asian demand and gold flows from West to East we are largely looking at China and India, so year-on-year statistics are hugely important when trying to assess the state of the global gold supply/demand balance. So far this year Indian gold demand has been substantially above that of a year ago, although perhaps could be a little anomalous because of purchases made ahead of the imposition of that country’s Goods and Services Tax (GST) which came in at 3% on gold as from July 1st.
Chinese demand – as represented by withdrawals from the Shanghai Gold Exchange (SGE) – had appeared to have slipped back marginally in the five months to end May, but bigger withdrawals in June – just announced – have redressed the balance, and year to date withdrawals are now a little up on the figure for last year (by 1.2%) but still down around 16.5% on the record figure recorded in the first six months of 2015.
As we’ve noted here before it is somewhat contentious whether SGE withdrawals are a true measure of Chinese gold demand – the major precious metals consultancies disagree. Yet they all seem to come up with different reasons to dispute this. But on our reckoning it’s a pretty good measure as the annual SGE withdrawals figure corresponds quite neatly with the sum of known Chinese gold imports, plus Chinese domestic gold production plus a contingency for scrap and imports from gold producing nations which do not publicise their gold export figures on a country by country basis. In other words, SGE withdrawals come in at close to known and estimated gold flows into China.
This post was published at Sharps Pixley
Follow on Twitter
Recent Comments