(Reuters) -China’s net gold imports via Hong Kong slumped 38% in April from the previous month, Hong Kong Census and Statistics Department data showed on Monday.
The drop comes as elevated prices and economic challenges prompted a reduction in import quotas by the central bank, which is focused on stabilizing the yuan.
Net imports into the world’s top gold consumer stood at 34.575 metric tons in April, compared with 55.836 metric tons in March, data showed.
Total gold imports via Hong Kong were down about 32% at 43.261 metric tons.
WHY IT’S IMPORTANT?
China is the biggest bullion consumer and its buying trends can have bearing on global prices. The People’s Bank of China added 60,000 troy ounces of gold to its reserves in April, it said this month, extending the period of consecutive purchases to 18 months.
The Chinese central bank, which controls the amount of gold entering the country via quotas to commercial banks, was the largest official sector buyer of gold in 2023.
KEY QUOTE
“While there was a slight slowdown in purchasing attributed to rising prices, confidence in acquiring gold remains steadfast,” said Bernard Sin, regional director, Greater China, MKS PAMP.
“Given the magnitude of China’s economic challenges, it’s probable that gold imports will remain constrained. The central bank’s priority lies in maintaining currency stability, potentially leading to limited import quotas or even their elimination to curb capital flight amid the spread between offshore and onshore yuan.”
CONTEXT
China’s central bank controls the inflow of gold via import quotas issued to banks. Reduced import quotas curb outflows of yuan used to buy gold, helping stabilize the currency value.
Physical gold demand in China has been robust this year due to continued currency devaluation and economic concerns.
However, the Hong Kong data may not provide a complete picture of Chinese purchases, as gold is also imported via Shanghai and Beijing.
Spot gold was trading around $2,344 per ounce by 1158 GMT. Bullion hit a record high of $2,449.89 last week, but has shed more than $100 since then. [GOL/]
(Reporting by Harshit Verma in Bengaluru; Editing by David Goodman and Sriraj Kalluvila)
