HardAssetsInvestor

Written by Sumit Roy  |

February 05, 2013

China’s Gold Imports Spike Almost 50% In 2012; Gold Trapped In Trading Range

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We offer our latest analysis on the precious metals market.

Though it’s unlikely to impact price action much, next week the World Gold Council will reveal the long-awaited answer to the question of who the largest gold consumer was in 2012. Demand for gold from China and India was neck-and-neck through the third quarter, with India slightly ahead, but the latest import figures from China have fueled speculation that it may have edged out India as the largest market.

Hong Kong government figures for December showed that mainland China imported a record 94.7 metric tons (net) from Hong Kong—a proxy for overall gold imports into China, which aren’t reported. For 2012 as a whole, China imported a net 557.5 metric tons, up 47 percent year-over-year and also a record.

"This is a very strong number," said Nick Trevethan, senior commodity strategist at ANZ. "China's implied gold demand looks set to approach or exceed 1,000 metric tons based on Hong Kong trade data and the annualized gold production number."

Annualizing actual data through the first 10 months of the year, China may have produced 387 metric tons of gold in 2012.

Gold prices showed little reaction to the news of China’s robust demand. Both gold and silver continue to hold steady within their respective trading ranges as traders search for a catalyst. The European Central Bank’s policy decision on Thursday is unlikely to be that catalyst; the central bank is expected to hold interest rates steady amid a retrenchment in the region’s sovereign debt crisis and signs of life in the eurozone economy.

Bottom Line: China’s gold demand in 2012 was impressive, but the gold market didn’t flinch. Prices remain range-bound between $1630 and $1690.

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