Gold withdraws from the Shanghai Gold Exchange improved

 CHINA (July 13) Gold withdrawals from the Shanghai Gold Exchange (SGE) totaled 140t in June, a 37t improvement from May and 7t higher Y/Y (according to the WGC). The economy in China showed decent signs of recovery amid fewer COVID-related restrictions and accommodative policies. June’s manufacturing Purchasing Managers Index (PMI) rebounded to the highest level since last March. This could indicate that the harder times are about to turn.

In terms of investment, Chinese gold ETFs saw a 0.3t (-US$37mn) inflow in June, leading to an 18.3t (US$1bn) net outflow during H1.

The WGC report said, as local economic activities continued to improve, gold withdrawals from the Shanghai Gold Exchange (SGE) extended their recovery in June. But total withdrawals in H1 2022 registered a 12% Y/Y decline due to COVID disruption.

On the plus side, pent-up wedding demand, and a weak RMB, among other factors, could provide support for Chinese gold consumption in the second half.

In May gold imports stayed weak. 26t of gold were imported by China in May, 1t lower M/M and significantly weaker Y/Y. Ongoing lockdowns and a narrow local gold price spread in May have been key drivers behind such weakness. There has been a drop in the gold price so this could add some incentive to replenish storage levels.

KITCO