Gold demand in China remains strong in the build-up to the Lunar New Year, with gold price premiums on the SGE rising to 7%. Article as published on Mineweb.com . Check out Mineweb for more articles on mining, metals and minerals.
In releasing the latest information on Chinese gold withdrawals, the Shanghai Gold Exchange (SGE) both confirmed that total withdrawals for the year came to over 2,100 tonnes, only 3.6% down on the previous year’s record, but also that withdrawals for the final three trading days of the month amounted to some 29 tonnes suggesting that demand remains strong ahead of the Chinese New Year. Indeed with a longer runup to the Lunar New Year this year – the actual date is February 19th – the second latest date in the Western calendar on which the Chinese New Year can fall, we can expect strong gold withdrawal figures out of the SGE for both January and February.
In the Chinese Zodiac 2015 is a Sheep year (also known as Goat or Ram year) and denotes both calmness and prosperity.
If last year’s pattern of gold buying ahead of this date is followed then January could be a very big month for Chinese gold demand indeed. Last year gold withdrawals from the SGE that month were actually substantially higher than at the start of the record 2013 year – and if demand in the last quarter of 2014 is anything to go by, they could be at close to record levels again this year. Traditionally Chinese New Year celebrations involve gold gifting, and January tends to be the month that gold traders and banks stock up ahead of the date and holiday period surrounding it.
Anecdotal reports suggest that this is already the case with high demand levels already being seen at the beginning of the month. Reuters reports, for example, a Shanghai trader as saying “We saw consistently strong buying this week, premiums and volumes are better than what we saw in the last month.” As confirmation SGE premiums for gold have risen to $7 an ounce as demand grows.
Withdrawals from the SGE have been averaging over 50 tonnes a week for virtually all of the past three months. With the actual date of the Chinese New Year falling more than 2 weeks later than it did last year when it fell on January 31st we can probably expect a slower, but more prolonged, build-up this year. Judging by the increased premiums, if the Shanghai trader is correct we could also see something of a boost in the early January figures.