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LAWRIE WILLIAMS: China’s April gold demand confirms sharp economic downturn

11 May 2022

The latest figures from China’s Shanghai Gold Exchange (SGE) for the April month’s gold withdrawals would seem to confirm a sharp downturn in that country’s key economic activity.  This amidst some draconic measures to try and control new coronavirus outbreaks in some key industrial centres.  Indeed the April gold withdrawal total at 83.74 tonnes is the lowest since July 2020 which was in the heart of the original Covid-19 outbreak in that nation.

Table: China SGE Monthly Gold Withdrawals 2020-2022 (Tonnes)





% change 2021-2022

% change2020-2022























































Full year





 Source:  Shanghai Gold Exchange, Sharps Pixley.

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

What this may suggest is that the current coronavirus outbreak in China is more serious, and widespread, than the country’s government is telling us.  Or perhaps because this time it is having a greater impact because it seems to be affecting the major centres of Shanghai and Beijing, which were largely spared at the height of the initial outbreak.  Whatever the reason for the downturn, it is indeed likely to have an adverse impact on worldwide gold demand given that China has been the world’s largest gold consuming nation for some years now.

Of course the other effect is on global supply chain disruptions given the importance of Chinese products in global markets.  It seems that hardly anything one buys in the West has not been made in China these days – particularly in the electronics sector.  Already supply chain disruptions are a major contributor to global inflation.

There are also some reports suggesting that India, the world’s second largest gold consumer, may also be seeing a resurgence of coronavirus infection spread as new more infectious variants begin to dominate.  Infection figures seem to be rising again in the U.S. too where virus-related deaths have already surpassed 1 million people and new infection rates are now also at worrying levels in Germany and France in Europe, with something of a return to higher infection figures in Italy, while other countries where things had seemed to be well under control, like Japan, South Korea, Australia, New Zealand even among others are seeing worrying infection numbers.  The world is probably learning to live with the coronavirus, but the pandemic seems far from over and will continue to have an impact for the foreseeable future, if not for ever.

But back to China.  We equate Chinese SGE gold withdrawals with overall demand levels – particularly with respect to gold imports and we have already noted a huge fall-off in Swiss gold exports to both China/Hong Kong and India, which has to be worrying for the gold mining sector.  China is itself the world’s largest gold producer from its mines and as a byproduct from its big smelting and refining industry, so can probably meet the reduced demand level almost entirely from its own output. 

World No. 2 producer (by some estimates) Russia, too, will be keen to sell gold to the Chinese markets if Western outlets are blocked due to economic sanctions, but may find there is no market for its excess output there.  No doubt there are some countries which are not party to sanctions on Moscow, which will still buy Russian gold, particularly if it is offered at a discount.  Thus we do see some disruptions in the gold markets ahead.   Gold may therefore be in for a difficult few months, particularly if the fall-off in demand from China and India persists.

11 May 2022 | Categories: Gold, China, India, Switzerland

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