China’s economy remained under pressure in November 2023. According to the National Bureau of Statistics, China’s official manufacturing PMI fell further to 49.4.
And the non-manufacturing PMI also saw continued declines, although it remained above the 50 expansion-contraction threshold. On the bright side, exports rose by 0.5% y/y, defying the consensus of a 1.1% y/y decline.
The industry withdrew 132t of gold from the Shanghai Gold Exchange (SGE) in November, 11t higher m/m and 16t higher y/y. Seasonality was once again the key driver of this m/m rise in wholesale gold demand. Historical data suggests that replenishing activities from gold manufacturers tend to pick up ahead of the traditional peak season for gold consumption during the Chinese New Year holiday, which usually occurs in January or February.
The average Shanghai gold price premium in November was $44/oz, or 2%, virtually unchanged from October’s $45/oz (2%). Lower imports in recent months, compared to earlier this year, and relatively stable demand may have kept local net gold supply tight, supporting the Shanghai-London gold price premium.
China’s gold reserves climbed to 2,226t by the end of November, a 12t m/m increase and the thirteenth successive reported purchase. During this 13-month period, 278t of gold has been added to the PBoC’s gold reserves. So far in 2023 China has announced gold purchases amounting to 216t.
According to the latest information, China imported 95t of gold in October, a 29t decline m/m and 32t lower than the y-t-d average. Seasonal weakness in wholesale demand and the retreating premium, among other factors, may have impacted October’s imports. Y-t- d, gold imports into China totalled 1,241t, 105t lower y/y.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
