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Informist, Thursday, Nov. 14, 2024

MUMBAI – After a drop in demand for gold in China in October, wholesale demand for the yellow metal in the country is likely to rebound in the coming months as prices of the commodity stabilise, said Ray Jia, research head of World Gold Council, China. Positive economic data and recent stimulus by the People's Bank of China will also support gold consumption, Jia said, adding, "Improved economic growth momentum should be beneficial to Chinese gold consumption." 

 

Earlier this month, China's Standing Committee of the People's National Congress announced a 10-trillion yuan ($1.4 trillion) package to refinance local government debt and support the sluggish economy.

 

In October, a total of 107 tonnes of gold were withdrawn from the Shanghai Gold Exchange, a 6% month-on-month decline, Jia said in China's gold market report for October. Traditionally, wholesale demand for gold in China tends to fall in October after the industry's active replenishment in September ahead of the early October Golden Week.    

 

Although the month-on-month fall in demand for gold in October is seasonal, it is the smallest since 2014. But the yellow metal has remained weak on a yearly basis and was down 11% from a year ago, Jia said. The wholesale demand for gold was also 21?low the 10-year average.  

 

Meanwhile, inflows into Chinese gold exchange traded funds surged in October to $1.8 billion, the highest ever, Jia said. "Their total assets under management surged to $10 billion and collective holdings reached 112 tonnes, both recording their historical highs.

 

"October was a tale of two halves," Jia said. In the first half, there were outflows as investors turned to equities, which jumped due to announcements of stimulus before the Golden Week, and attracted their attention, he said. "But the amplified stock market volatility and the surging local gold price fuelled sizeable inflows into gold ETFs in the second half, significantly outpacing earlier losses."

 

At 1510 IST, the most-traded December gold contract was 1.14% down at $2,557.2 per ounce.  End

 

US$1 = INR 84.39

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by J. Navya Sruthi

Edited by Avishek Dutta

 

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