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LAWRIE WILLIAMS: Asian gold demand picking up sharply again

Taken together with reports suggesting that Indian gold imports and demand had picked up very sharply in July, the latest gold withdrawal figures for August from China’s Shanghai Gold Exchange (SGE) point to a big pickup in gold demand from Asia in total.  This could be coming about as the effects of the COVID-19 virus pandemic in the world’s two most populous nations, and the two biggest global gold consumers, appear to be diminishing.  While neither country can be said to be fully recovered from the ravages of COVID-19, it does appear that they may be coming to terms with it and getting back to near normal.

The latest gold withdrawal figures from the SGE are set out below and show that, for August at least, the amount of gold withdrawn, which some see as representative of overall Chinese demand for the metal, was higher than in both 2020 and in the pre-pandemic 2019 years.

Table: China SGE Monthly Gold Withdrawals 2019-2021 (Tonnes)

 Month

2021

2020

2019

% change 2020-2021

% change 2019-2021

January

159.49

110.87

218.54

+43.9%

  -27.0%

February*

 92.39

 28.99

  99.77

 +643.6%

 -7.4%

March

 167.74

 82.27

 218.03

 +103.89%

 -23.07%

April

 148.04

 95.80

 151.89

 +54.53%

 -2.5%

May

 105.06

 69.18

 123.11

 +51.86%

 -14.66%

June

 132.80

 85.71

 107.45

 +54.94%

 +23.59%

July

 110.61

 82.94

 129.33

 +33.36%

 --14.47%

August

 149.95

 111.37

 107.73

 +34.64%

 +39.19%

September

 153.98

 117.08

October*

 94.28

   91.15

November

 127.65

 119.43

December

 162.30

 158.50

Cumulative**

1006.46

 666.43

 1154.87

+51.02%

-12.85%

Full year

1,205.33

1,642.01

 

 Source:  Shanghai Gold Exchange, Sharps Pixley.

*Months incorporating Golden Week holidays when SGE closed for a week

** Cumulative totals as reported by SGE for first six months of the year

 The cumulative figure for gold withdrawals from the SGE up to the end of August is already over 1,000 tonnes and hugely ahead of last year when the full year total was a little over 1,200 tonnes.  However it is still well behind the cumulative total at this time in 2019 when the annual total came in at over 1,640 tonnes.  Figures did tail off, though, in the final few months of 2019  – normally strong months for gold demand ahead of the Chinese New Year - and we suspect that there’s a good chance that this year’s final total will come out at 1,500 tonnes or more.  This is well short of the 2,500 tonnes plus of the 2015 record, but looks to be heading in the right direction as the Chinese economy continues to recover from the low levels of COVID-hit 2020.

 With Indian gold imports picking up so strongly in July with unconfirmed unofficial reports that they reached 121 tonnes that month (See: Indian gold demand on the up again), and that demand remains strong there ahead of the Festival and Wedding seasons, we do seem to be seeing a resurgence in the hugely significant Asian demand levels for precious metals.  With so much geopolitical uncertainty around, particularly following the excessively rushed American pullout from Afghanistan, and the worldwide spread of the Delta variant of the coronavirus, associated demand from nervous investors should remain relatively strong,  For example we have been seeing much stronger gold and silver coin sales from the U.S. Mint of late, and this should all filter through into demand, and prices, for the remainder of the year.

11 Sep 2021 | Categories: Gold, China, India

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