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LAWRIE WILLIAMS: China gold demand off to decent 2019 start

The first 2019 announcement for Shanghai Gold Exchange gold withdrawals for January, a little delayed because of the Chinese New Year holiday, was marginally below last year’s relatively high figure but is still at a high monthly level so could be considered a decent start to the year.  However January withdrawal figures do tend to be reasonably high due to good demand ahead of the Lunar New Year festivities and associated gift giving.

It is obviously too early yet to draw any conclusions re likely Chinese demand for 2019 - we will really need to wait for a couple more months’ withdrawal figure once data for the February short holiday month data is behind us, but the reasonably strong start will give the gold bulls at least a little comfort given how important Chinese demand is to the global picture.  China gold data, as represented by SGE gold withdrawals, had appeared to be slipping a little from the middle of 2018, but had appeared to be stabilising towards the year end and the January figure will have served to confirm that pattern.

We tend to equate Chinese total gold demand with cumulative SGE figures given they seem to provide a fair correlation with the sum of known Chinese gold imports from those countries which provide a country-by-country breakdown of their own gold exports, plus the nation’s own gold output, plus unreported imports (Russian figures may be important here) plus an allowance for scrap conversion.  These SGE figures seem to provide a closer reality  with total Chinese domestic annual gold accumulations than the published demand figure provided by the China Gold Association and the major analytical consultancies specialising in precious metals like GFMS and Metals Focus.

Table: SGE Monthly Gold Withdrawals 2016-2018 (Tonnes)





% change 2018-2019

% change 2017-2019









































































Full Year






Source: Shanghai Gold Exchange. 

* Months include week long New Year and Golden Week holiday periods

Asian demand in general does seem to have begun the year reasonably strongly with Indian gold demand in 2019 seen to be strengthening according to a recent analysis by the World Gold Council (WGC) published earlier last week. The analysis suggests that the world’s second largest gold consumer could see gold demand picking up a little in 2019, over and above the in 2018 total which the WGC puts at 760.4 tonnes.  This would be perhaps due to the Modi Government seeking to boost consumer demand and confidence ahead of a general election due by May this year.

In general much media and analytical comment is suggesting a rise in the gold price during the current year.  But then at this time a year ago much the same was being suggested and after a promising start early advances proved to be shortlived with a mid-year downturn and the metal price being a little down over the full year despite a decent pick up in November and December.

Also, as we have recently noted, sharp sales in the first couple of weeks of the current month out of the biggest gold ETF, GLD, have been suggesting institutional nervousness relating to gold’s likely price path.  It remains to be seem whether the strong uptick in price over the final days of last week will see a reversal of this trend moving ahead.

We remain reasonably bullish on gold for the year as there does seem to be an accumulation of potentially positive data and possible geopolitical events ahead which look to us to be gold supportive.  But much will likely depend on economic perceptions in the U.S. in particular given the place the U.S. futures markets in particular has on the path of the gold price.  The politicians in power will, no doubt, seek to present a positive picture given the long runup to the 2020 U.S. Presidential election will be getting into gear this year and much may depend how successful they are in achieving this and in countering anti-Trump sentiment being promulgated by his opponents.

18 Feb 2019 | Categories: Gold

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