China has severely restricted imports of gold since May, industry sources with direct knowledge of the matter told Reuters.
The move may be aimed at curbing outflows of USDs and bolstering its RMB Yuan currency as economic growth slows.
China has cut shipments by some 300-500 tonnes compared with last year – worth $15 to 25-B at current prices.
The restrictions come as an escalating trade dispute with the United States has hobbled China’s pace of growth to the slowest in 30 yrs, and pressured the RMB Yuan to its lowest since Y 2008.
China is the world’s biggest importer of gold, buying in around 1,500 tonnes of the precious Yellow metal worth $60-B last year, according to its customs data, that is 33% of the world’s total supply.
Chinese demand for gold jewelry, investment bars and coins has 3X’d in 20 yrs, as the country has become wealthier. China’s official gold reserves meanwhile rose 5X to nearly 2,000 tonnes, according to official data.
Chinese customs figures show it imported 575 tonnes of gold in 1-H of Y 2019, down from 883 tonnes in the same frame of 2018.
The bulk of China’s gold imports comes from Switzerland, Australia and South Africa and are usually paid for in USDs. These transactions are conducted by a group of local and international banks given monthly import quotas by the PBoC.
But quotas have been pared or cut off for several months, credible sources have said.
“There are virtually no import quotas now issued in China,” 1 source said. In June and July “next to nothing” was imported by banks.
Imports have not fallen to Zero because some banks may still be receiving some quotas and other import channels, such as refineries receiving dore, or semi-pure mined gold, remain open.
The PBoC did not respond to a written request for comment.