LAWRIE WILLIAMS: China gold demand highest for 3 years
The latest figures for October for gold withdrawals from the Shanghai Gold Exchange (SGE), which we equate to total Chinese gold demand, have come in at 136.62 tonnes. This is lower than for September, but October tends to be an anomalous month as it contains a week-long public holiday period when the SGE remains closed. In point of fact the latest October figure is the highest for that month since 2018 when October SGE gold withdrawals for that month totalled 142.94 tonnes and the full year figure was 2,054.54 tonnes. While we don’t see China's full year 2021 SGE gold withdrawals coming in as high as this we do think there’s a strong chance of the full year total at least being the highest level for 3 years at over 1,650 tonnes which demonstrates how strong the recovery from the Covid outbreak has been in that country.
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 |
190.87 |
153.98 |
117.08 |
+23.96% |
+63.03% |
|
October* |
136.62 |
94.28 |
91.15 |
+44.91% |
+49.88% |
|
November |
127.65 |
119.43 |
|||
|
December |
162.30 |
158.50 |
|||
|
Cumulative** |
1,393.57 |
914.69 |
1,363.10 |
+52.35% |
+2.2% |
|
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 month by month by SGE for first ten months of the year.
Interestingly the cumulative gold withdrawals figure to date for the first 10 months of the current year is in excess of the full year 2020 withdrawals total and closing in on that for the pre-Covid 2019 full year amount. With Chinese demand tending to strengthen over the final two months of the year in the runup to increased demand ahead of the Lunar New Year, we do expect full year demand to carry on increasing to at least match. or probably exceed, the 2019 level. Next year’s Lunar New Year, a tiger year, falls on February 1st
Indian gold demand is still also apparently running strong, thus gold demand from the world’s two leading consuming nations looks like it should be well in excess of that for 2020. This should go a long way towards compensating from a probable fall-off in gold ETF accruals this year and perhaps an annual downturn in central bank gold buying too. With the gold price having picked up strongly last week in response to above expectation inflation data, there remains the prospect of further gold and silver consolidation around the $1,860s and $25s respectively prior to a possible further upwards price movement for both precious metals before the year end.
