Tuesday, May 27, 2014

Gold: When It’s Not Weak Demand in India, It’s China

Front futures down some more since this morning's post, $1266.80 last.
From Barron's Focus on Funds:
India and China are the world’s two biggest consumers of gold, which is not to say the two countries always deliver good news for the metal and its investors.

Gold prices are down more than 1% this morning following a report that Chinese gold imports via Hong Kong fell during April to the lowest since February 2013.

Though the news won’t surprise those who heard last week via the World Gold Council that demand in the country fell 18% in the first quarter, it underscores a trend of weak Asian demand that could put investors on the defensive. The country imported 67 tons of gold, down from 85 in March, Reuters reports. Commerzbank’scommodity strategists sum it up for clients this morning:
Unless the recently subdued physical demand in Asia picks up again, the gold price risks falling even further, so attention will be focused on China and India, the two most important countries in terms of demand. According to figures just released by the Census and Statistics Department of the Hong Kong government, China imported a mere 67 tons of gold on balance from the former British crown colony in April. This is 21% down on the month-on-month figure and the lowest monthly import volume since February 2013. Although a low figure had already been anticipated, this is nonetheless likely to further weigh on the gold price in the short term.
Just as this is taking place, India’s picture is brightening. Demand had been repressed by a weak rupee and stricter controls on gold imports until recently. Both factors are changing....MORE
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