RMB Yuan Weakens, China Purchasing Gold Overseas
$GLD, $SLV, $USDCNY
As the RMB Yuan retreats, China is buying Gold. The world’s biggest consumer of the precious Yellow metal raised bullion imports from Hong Kong in September for the 1st time in 4 months as investors sought to diversify their assets on prospects for further currency weakness.
Net purchases were 44.9 tonnes from 41.9 tonnes in August, according to data Thursday from the Hong Kong Census and Statistics Department. The mainland bought 64.8 tonnes compared with 55.2 tonnes in August, while exports were 19.9 tonnes from 13.2 tonnes.
Mainland China does not publish the figures.
The offshore RMB Yuan sank to a record low this week as Chinese policy makers signaled they are willing to allow greater currency flexibility amid a slump in exports and rise in the USD.
Further losses in China’s currency, as well as investors’ concerns over the outlook for the nation’s property market, may spur Gold demand in China.
“The depreciation of the yuan and the property investment clampdown were both positive factors for the rebound in imports as domestic investors seek to diversify portfolios,” said that executive director for commodities and foreign exchange at the wealth management unit at UBS Group AG.
Shipments of Gold from Switzerland to China rose to 35.5 tonnes last month from 19.9 tonnes in August while exports to Hong Kong fell to 11.5 tonnes from 24 tonnes, according to data from the Swiss Federal Customs Administration. The European country is a major Gold-trading center and home to several refineries.
The higher Chinese imports came in a month when global prices and holdings in exchange-traded funds rose only 0.5%. as investors weighed comments from Federal Reserve officials on a possible US rate increase.
- December Gold ended today’s session +7.60 (+0.6%) at 1277.00 oz
- December Silver closed today’s session +0.15 higher (+0.9%) at 17.80/oz
This week, the offshore RMB Yuan has traded at the weakest level in data going back to August Y 2010. In Shanghai’s spot market, the currency has lost more than 4% since the start of Y 2016, dropping to the lowest mark in 6 years.
- USDCNY: +0.16% to 6.798 (6-year high)
Have a terrific weekend.