Your basket will timeout in Checkout
Time remaining:

LAWRIE WILLIAMS: Chinese gold demand still picking up – but slowly

December is always a positive month for Chinese gold demand as represented by reported withdrawals from the Shanghai Gold Exchange (SGE) because it is a month in which traders and fabricators start to stock up ahead of anticipated gold demand for Chinese New Year gifting activity.  This year, the Chinese New Year falls on February 12th, initiating a week-long holiday when official institutions, like the SGE itself, will be closed.  Many other businesses will also be closed for this Golden Week holiday period, although there will also be something of a retail shopping spree – not least in stores selling gold bullion and artefacts.

This year SGE December withdrawals slightly exceeded those for December 2019, and indeed was the highest withdrawal month of the year, although it still fell slightly short of the December 2018 figure.

As can be seen from the table below, which sets out the month by month SGE gold withdrawal totals and the overall adjusted cumulative totals for the year as reported by the SGE at a little over 1.2 million ounces, this actually represents the lowest Chinese annual demand total for 8 years and less than half the amount withdrawn in the record 2015 year.  Given that we equate the SGE gold withdrawal figures to overall Chinese demand - they tend to equate closely to known Chinese gold flows as represented by published gold import data, plus China’s own gold production plus an allowance for scrap conversion – they still represent an important window on overall gold demand in the world’s largest gold consumer.

Table: SGE Monthly Gold Withdrawals 2018-2020 (Tonnes)

 Month

2020

2019

2018

% change 2019-2020

% change 2018-2020

January

110.87

218.54

223.58

-49.31%

-50.64%

February*

 28.99

  99.77

118.42

 -71.14%

-75.52%

March

 82.27

 218.03

192.61

 -62.27%

 -57.29%

April

 95.80

 151.89

212.64

 -36.93%

 -54.95%

May

 69.18

 123.11

150.58

 -43.81%

 -54.06%

June

 85.71

 107.45

140.59

 -20.23%

 -39.04%

July

 82.94

 129.33

137.41

 -35.87%

 -39.64%

August

 111.37

 107.73

190.59

 +3.38%

-41.57% 

September

 153.98

 117.08

188.12

 +31.52%

 -18.15%

October*

 94.28

   91.15

142.94

 +3.43%

 -34.04%

November

 127.65

 119.43

179.08

 +6.9%

-28.7% 

December

 162.30

 158.50

178.04

 +2.3%

 -9.7%

Full year**

1,205.33

1,642.01

2,054.54

-36,23%

-70.45%

 Source:  Shanghai Gold Exchange.

*Months incorporating Golden Week holidays when SGE closed

** Cumulative totals as reported by SGE

The question remains though, do the latest SGE figures indicate a gold demand pick-up in China, which is hugely important for the global gold supply/demand picture now the level of huge inflows into the gold ETF sector seems to be diminishing – or even falling.  The gold market could do with some positive news!

There is little doubt that 2020 gold demand figures in China were heavily affected by an economic downturn in the first half of the year because of the COVID-19 virus pandemic.  The Chinese economy does seem to be recovering so this does represent blue sky on the horizon.  But the pandemic is still possibly expanding in the U.S. and Europe, two of China’s biggest export markets, and this is bound to have an impact on the nation’s short term prospects for economic growth.  Nonetheless there are signs that Chinese demand is improving, albeit slowly, and with the Chinese New Year holiday coming in a little later this year we would anticipate decent Chinese gold demand figures for January 2021.  It remains doubtful whether Chinese demand will return to its 2015 record level – at least not for a few years yet – but there are at least some positive signs for the gold investor.

12 Jan 2021 | Categories: Gold

Send a message

Can we help?-

We are online Mon-Fri between 9am-5pm. Please leave a message and we'll get back to you.

Our showroom is also open Mon-Fri between 9am-5pm at 54 St James's Street, London, SW1A 1JT.

Contact us on +442078710532.

Many thanks for your time, we will be in touch where appropriate.

Close