Gold Demand In China Down 37%

Posted by: : Paul EbelingPosted on: November 13, 2014 Gold Demand In China Down 37%

Gold Demand In China Down 37%

Gold demand in China shrank for a 3rd Q runnig, as slumping prices failed to boost the purchases of bars, coins and jewelry in the world’s biggest user and officials pressed on with a nationwide anti-graft campaign.

Buying by Asia’s largest economy tumbled 37% to 182.7 metric tons in the 3 months to 30 September from the same frame in Y 2013 as last year’s price-driven surge in demand was not repeated, the World Gold Council (WGC) said in a report Wednesday.

India was the only Asian economy tracked by the producer-funded group that bought more bullion than China as usage across the biggest consuming region contracted 15% to 473.4 tons.

An anti-graft drive in China this year hurt demand for luxury goods including bullion, while volatility that sank to a 4 yr low damped interest in the precious Yellow metal as an alternative investment.

Banks including Goldman Sachs Group Inc.(NYSE:GS) expect prices to extend losses, in part as the buying frenzy that accompanied Gold’s fall into a Bear market in April 2013 has not been sustained.

China surpassed India as the world’s largest Gold user last year as prices retreated 28%.

“The scale of 2013’s exceptional buying continued to overshadow the market,” the London-based council said in the quarterly report that surveys global demand patterns. “The quiet environment provided China’s notoriously price-savvy investors with a further reason to stay out of the market.”

Spot gold lost 3.4% YTD at 1,161.14 oz. Prices fell 9% in the 3 months through 30 September, the 1st Quarterly fall in Y 2014, compared with a 7.7% gainer a year earlier.

Gold jewelry consumption in China fell 39% to 147.1 tons in the Quarter, while demand for Gold bars and coins slid 30% to 35.6 tons, the WGC said. Usage in the 9 months to September was 638.4 tons, according to WGC reports in May, August and Wednesday.

Last year, Mainland demand was a record 1,275.1 tons, according to the council at a briefing in Shanghai Wednesday.

“China’s jewelry market continued to normalize following last year’s rapid expansion,” the council said. “Chinese investment demand this year has paused to catch its breath. Fourth-quarter bar and coin demand is shaping up to be much the same — steady, but unremarkable.”

Bullion will extend losses as the US economyrecovers and the dollar strengthens on prospects for higher interest rate, according to Goldman, which has predicted that bullion may end this year at 1,050. The chances are increasing that the metal will slip to 1,000, according to Societe Generale SA.

COMEX Gold Continuous Contract
Last 1160.5 Change -1.3 Change % -0.1%
Open 1161.8 High 1162.3 Low 1160.3

Last Updated: 13 November 23:40 GMT

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Paul Ebeling

 

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.
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