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Gold prices were supported by factors such as rising geopolitical risks and active futures trading in April, according to Ray Jia, Head of China Research at the World Gold Council (WGC).
In WGC’s recently updated report, Jia noted while the gains were lower than in March, there were very positive developments in the Chinese gold market, including sky-high imports and unprecedented ETF investment demand, which offset the dampened consumer demand for gold jewellery.
Demand for Chinese gold ETFs exceeded all expectations, according to the World Gold Council. After five consecutive months of inflows into gold ETFs, April’s inflows were the strongest on record.
The report reads, “April attracted RMB 9bn (US$1.3bn), the strongest month on record, pushing total gold ETF assets under management to a record high of RMB 46bn (US$6.4bn). At the same time, holdings recorded their biggest monthly increase ever, rising by 17 tonnes to 84 tonnes.”
Meanwhile, China’s official gold reserves continued to grow in April. According to a recent announcement by the People’s Bank of China (China’s central bank), China’s official gold reserves grew for the 18th consecutive month, increasing by 2 tonnes in April. China’s official gold holdings now total 2,264 tonnes, or 4.9% of the country’s total foreign exchange reserves, the highest on record.
Jia also mentioned that China’s sky-high imports in March pushed gold imports in the first quarter to the highest level in nine years. Data showed that China imported 85 tonnes of gold in March, up 8% from the previous month. Gold imports in the first quarter totalled 324 tonnes, up 17% year-on-year and the strongest quarter for imports since 2015.
The World Gold Council expects that China’s domestic consumption of gold jewellery may show some signs of weakness due to a combination of seasonal factors and high gold prices, but demand for preservation of value and the attention gold is currently receiving will support gold investment demand in China, playing an important role in stabilizing the gold price.
