China’s April Gold Imports Drop Amid Lower Investment Demand

May 27, 2014 3:56 pm ET

May 28 (Bloomberg) -- China’s gold imports from Hong Kong fell in April amid signs that investment demand waned in the the world’s largest gold consumer.

Net imports totaled 65.4 metric tons last month, compared with 80.6 tons in March and 75.9 tons a year ago, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department yesterday. Exports to Hong Kong from China fell to 15.4 tons in April from 25.3 tons in March, the department said in a separate statement. Mainland China doesn’t publish such data.

Lower demand from China, which surpassed India as the biggest gold consumer last year, may weigh on prices that have increased 6.8 percent this year, partly on haven demand amid tension in Ukraine. As holdings in bullion-backed exchange- traded funds contract to the least since 2009, Goldman Sachs Group Inc. expects the precious metal to extend declines after a 28 percent drop in 2013, the most in three decades.

“Chinese consumers are buying fewer bars and coins,” said Duan Shihua, a partner at Shanghai Leading Investment Management Co. “As prices climbed this year, bargain-hunting activity has calmed down.”

Record Purchase

The country purchased a record 1,066 tons last year as the steepest price drop since 1981 spurred a 32 percent jump in demand for bars, coins and jewelry, according to the World Gold Council.

China’s gold demand fell 18 percent in the first quarter as investors bought fewer bars and coins, offsetting record interest in jewelry, the producer-funded council said on May 20. Purchases declined to 263.2 tons in the three months through March from a year earlier.

While jewelry consumption rose 10 percent, demand for bars and coins sank 55 percent to 60 tons in the first quarter, accounting for about 40 percent of the global decrease.

Gold futures for August delivery fell 2 percent to settle at $1,265.70 an ounce at 1:34 p.m. local time on the Comex in New York after touching $1,264.50, the lowest for a most-active contract since Feb. 7.

Bullion of 99.99 percent purity on the Shanghai Gold Exchange advanced 1 percent in April.

Mainland Chinese buyers purchased a total 80.8 tons in April, including scrap, compared with 105.8 tons in March and 126.1 tons a year earlier, data from the Hong Kong government showed.

--With assistance from Alfred Cang in Shanghai.