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LAWRIE WILLIAMS: Chinese gold demand in March more than 2x prior year

China’s consumption of gold appears to be well back on track with Shanghai Gold Exchange (SGE) gold withdrawals for March coming in at more than double those reported in the same month in 2020.  We had already noted a pick-up in an article a month earlier – see: Global gold demand looks to be back on the rise?, but that was based on figures recorded in February, which can be misleading because of differing closing dates for the SGE during the week-long Chinese New Year holiday period.  March is thus the first really comparable month for gold withdrawal data – but before you gold bulls get too exuberant out there, SGE gold withdrawals are still running comfortably below those of 2019, and even more so below those of several prior years.

But the March SGE gold withdrawal figures are definitely a step in the right directions as measured by this particular metric.  If the SGE can sustain this kind of withdrawal volume level, then 2021 figures could well start playing catch-up with the cumulative figures of 2019 where demand seemed to weaken over the final nine months of the year.  By most accounts the Chinese economy has recovered strongly from the Covid-hit 2020 and is again growing at a positive rate by as much as 8.4% this year according to estimates by the IMF.  This seemingly ever-improving outlook could well be replicated in this year’s gold demand figures, which should mean a huge positive for global gold demand.

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





% change 2020-2021

% change 2019-2021




















































Full year





 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 three months of the year

 True an increase in China’s gold imports is not yet showing up in global gold statistics, but it should be remembered that China is currently comfortably the world’s largest producer of the yellow metal, and exports none of its output, so a good proportion of consumer demand can be met out of domestically-produced gold.  We suspect we will see imports beginning to pick up as the year progresses.

Of course there is another key Asian gold consumer, which historically has been the world’s largest until being overtaken by China a few years ago – India - and again by all accounts gold consumption there, as measured by gold imports as the country only produces insignificant amounts of gold itself, is also rising sharply.  Latest unconfirmed figures published by Reuters put India’s March gold imports at a record 160 tonnes, up 471% on February 2020 (when admittedly import levels were severely depressed).  If both China and India, the world’s two largest gold consumers, are indeed seeing the kinds of pick-up in consumption these latest figures suggest, this should strongly counteract some of the negative current sentiment towards gold which seems to be prevalent in the West, and in North America is particular. 

Gold ETF outflows are continuing, although seem to be slowing, and could turn around.  There has also been the calculation that central bank buying is likely to be lower this year now that Russia is no longer a buyer, although that could change now that oil and gas prices have been recovering from their low points, but recent news suggests India’s and Hungary’s central banks have been buyers of gold already this year, so perhaps the doom and gloom on central bank gold demand is a little premature.  But it is early days in the current calendar year and much could happen in the still Covid-affected remainder thereof.  It remains invidious to try and predict where precious metal prices will settle.  At the moment they seem to be going through a slight surge given continued doubts on likely equity performance given the continuing fall-out from the Archegos meltdown, but recent performance has been, to say the least, erratically volatile.  They are continuing to seek direction!  Gold has hit $1,750 again as I write, but whether it will be allowed to stay there remains to be seen.

08 Apr 2021 | Categories: Gold, China

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