'... and no one knows how much the central bank is buying'

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Hong Kong-to-China Gold Flow Hit Record in 2012

By Rujun Shen
Reuters
Tuesday, February 5, 2013

http://www.reuters.com/article/2013/02/05/hongkong-gold-china-idUSL4N0B5...

SINGAPORE -- Hong Kong's net gold flow to mainland China jumped 47 percent in 2012 to a record high of 557.478 tonnes, indicating robust demand in China, which vies with India to be the world's top gold consumer.

Hong Kong shipped 114.372 tonnes of gold to China in December, also a record high for monthly exports. The former British colony received 19.644 tonnes of gold from the mainland in that month.

Its total gold shipments to China in 2012 jumped 94 percent from the 2011 total to over 832 tonnes, but imports also were six times higher at 274.684 tonnes, data from the Hong Kong Census and Statistics Department showed on Tuesday (www.censtatd.gov.hk).

... Dispatch continues below ...



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"It is not a surprise," said Dan Smith, head of metals research at Standard Chartered. "Consumer and investment appetite was quite strong and no one knows how much the central bank is buying."

Investors are waiting for a research report from the World Gold Council due next week, which will show whether China overtook India last year as the world's top gold consumer.

"This is a very strong number," said Nick Trevethan, senior commodity strategist at ANZ in Singapore. "China's implied gold demand looks set to approach or exceed 1,000 tonnes based on Hong Kong trade data and the annualised gold production number."

The implied demand could reach 1,050 tonnes if gold inflow from other channels is factored in, he added.

China produced 322.8 tonnes of gold in the first 10 months of 2012, up 11 percent from a year earlier, the Ministry of Industry and Information Technology said.

Physical buying at the start of 2013 was strong as seasonal demand picked up before the Lunar New Year, which falls on Feb. 10. But buying has since ebbed as prices moved higher and settled in a rangebound mode.

Traders have said the pre-holiday demand is not as strong as in the past few years as improving global and domestic economies sap some investors' interest in gold.

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