China and India Gold Imports (Jul.) - Capital Economics
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China and India Gold Imports (Jul.)

Metals Data Response
Written by Kieran Clancy
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Despite a bounce-back in India’s imports of gold last month, China’s imports remained in the doldrums. Gold imports by both countries should rise in the months ahead, but a full recovery still appears to be a long way off.

Imports to remain weak for some time yet

  • Despite a bounce-back in India’s imports of gold last month, China’s imports remained in the doldrums. Gold imports by both countries should rise in the months ahead, but a full recovery still appears to be a long way off.
  • Chinese gold imports were down by 88.4% y/y in July according to the latest data from the Chinese Customs Authority (GACC). In fact, even the extremely modest m/m improvement in June was reversed last month. (See Chart 1.) This chimes with withdrawals from the Shanghai Gold Exchange, which also dipped in July. (See Chart 2.)
  • That said, jewellery sales in China are now very close to 2019 levels (see Chart 3), which portends greater demand for gold. And China has now returned to a net importer of gold, from a net exporter in April and May. All in all, we think that China’s gold imports will pick up in the months ahead on the back of the rebound in jewellery sales.
  • Meanwhile, India’s imports of gold continued to increase m/m in July, although they remained down by roughly a fifth y/y. (See Chart 4.) The improvement from June probably reflects the ongoing easing of the nation’s lockdown restrictions, which will have helped to bolster consumer confidence and spending. However, the lingering economic uncertainty, risks of localised lockdowns, and an extremely high domestic gold price will keep a lid on India’s gold imports in the months ahead.
  • Although gold imports by the top two consuming nations are unlikely to stage a full recovery for some time, we doubt this will prevent the gold price from pushing higher. After all, we anticipate that US real yields will drift a little lower, which should continue to bolster investment demand for gold.

Chart 1: China Gold Imports (Tonnes)

Chart 2: Shanghai Gold Exchange Withdrawals (Tonnes)

Chart 3: China Jewellery Sales (% y/y)

Chart 4: India Gold Imports

Sources: Bloomberg, Refinitiv, GACC, Capital Economics


Kieran Clancy, Assistant Commodities Economist, +44 (0)20 3974 7422, kieran.clancy@capitaleconomics.com