Gold is flowing into India and China, as demand for the yellow metal in the world’s two largest markets continues to boom.
Bullion.Directory precious metals analysis 6 June, 2017
By Peter Schiff
Chairman at SchiffGold
According to a Reuters report, gold imports quadrupled in May year-on-year, coming in at 103 tons. Analysts say they expect the rise in imports will likely help support global prices in the coming months.
Jewelers accounted for the bulk of Indian gold imports last month, as they worked to replenish depleted inventories after a booming Akshay Tritiya festival in April. Gold sales increased more than 30% during the important Hindu holiday. All-told, Indians bought more than 23 tons of gold in a single day.
It was the third straight month gold imports into India increased significantly. Demand for the yellow metal surged 582% year-on-year in March to 120.8 tons. That marked the highest monthly import level since the middle of 2015. Gold continued to flow into the Asian country in April, with imports doubling year-on-year.
Uncertainty over the tax rate for gold under the uniform goods and services tax has also spurred buying this spring. Over the weekend, the government announced the tax will be set at 3%, lower than the 5% level most observers expected. Analysts say the lower than expected tax will likely continue to support strong demand moving forward.
Chinese investors also have a renewed appetite for gold. Gold consumption shot up in China during the first quarter of 2017, rising a healthy 14.73%, and the trend appears to be continuing. According to a Bloomberg report, analysts expect imports into China from Hong Kong to increase to about 1,000 tons this year, compared with 647 tons in 2016. If so, it would mark the highest import level from Hong Kong to the mainland since 2013
Chinese Gold & Silver Exchange Society president Haywood Cheung told Bloomberg local investors are driving demand as they seek to protect their wealth from currency risks, a slowing property market, and volatile stocks, noting that gold bar sales increased by 60% in the first quarter of this year.
This article was originally published herePeople are looking at other means to invest, a safe haven to protect their renminbi because of the depreciation, so everybody starts to look for safe haven products. So I think we’re going to have a good year.”
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