23 Jun

Shanghai Gold Exchange Withdrawals Remain Strong

WRITTEN BY Annie Gilroy

Shanghai Gold Exchange withdrawals

China is one of the most important markets as far as gold consumption is concerned. Yet there’s no official data source to pinpoint the exact level of demand for gold in China. While gold imports from Hong Kong provide a directional sense of China’s demand, they offer incomplete data because additional shipments come into China through Shanghai and Beijing as well.

Shanghai Gold Exchange Withdrawals Remain Strong

China’s (FXI) Shanghai Gold Exchange withdrawals are the best indicator available of China’s demand for physical gold. All mined and imported gold in China can only sell through the SGE. By tracking these data, investors can get a good idea of the short-term direction for demand in China. According to many gold experts, withdrawal levels are close to the actual demand.

Withdrawals steady

Year-to-date, there have been gold withdrawals totaling 1,062 tons from the SGE. This is a gain of 20.2% from the same period last year. For the week ended June 12, 2015, withdrawals were a healthy 46.2 tons, which was a weekly gain of 41%.

Although this shows continued strong demand for physical gold in China, investors need to consider that the gold withdrawn could be supplied through any of these three modes:

  • imports
  • recycled gold
  • domestic production

Historically, physical gold buying from Asia has supported gold prices. Strong withdrawals from the SGE should support gold prices (GLD). This boosts gold stocks, including Agnico Eagle Mines (AEM), AngloGold Ashanti (AU), and Royal Gold (RGLD). It also affects gold ETFs such as the VanEck Vectors Gold Miners ETF (GDX). Agnico Eagle Mines and AngloGold Ashanti form 9.8% of GDX’s holdings.

Gold-backed ETFs are large holders of physical gold, so it’s important to track their buying and selling. In the next part of this series, we’ll see the import trend in May by gold’s second largest consumer, India.

Latest articles

23 May

Trade War Subdues Manufacturing PMIs around the World

WRITTEN BY Mayur Sontakke, CFA, FRM

Today, IHS Markit published its purchasing managers' indexes or PMIs for May countries around the world.

Best Buy (BBY) reported better-than-expected earnings for the first quarter of fiscal 2020, which ended on May 4.

23 May

Why Apple Stock Is Down 2.7% Today

WRITTEN BY John Parker

On May 23 at 12:46 PM EDT, Apple (AAPL) was trading at $179.12 with a 2.0% loss for the day.

The CBOE Volatility Index has been sitting at very low levels for most of 2019.

23 May

Cannabis Stocks Fell Due to Trade Fears

WRITTEN BY Adam Jones

On May 23, CannTrust (CTST) was trading nearly 4.1% lower, while Cronos Group (CRON) fell 3.3%.

US equity markets are in the red today amid the escalation in the US-China trade war.

172.31.38.64