China’s Gold Appetite Retreats After Lower Demand and Scandals

China’s gold imports from Hong Kong fell for a fourth month in June amid weaker demand from retailers and a deepening probe into commodities being used in financing deals.

Net imports totaled 36.4 metric tons, compared with 52.3 tons in May and 100.9 tons a year ago, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to Hong Kong from China rose to 19.7 tons in June from 14.9 tons in May, the statistics department said in a separate statement. Mainland China doesn’t publish such data.

Lower demand from China, which surpassed India as the biggest gold consumer last year, may weigh on prices that have increased 8 percent this year. Retail sales at Chow Tai Fook (1929) Jewellery Group Ltd., the world’s largest listed jeweler, fell 24 percent in mainland China during the three months through June 30, it said. Demand also declined as commodity financing deals unwound following a loan fraud investigation in eastern China’s Qingdao, said Liu Xu, an analyst at Capital Futures Co.

“The drop in imports for a fourth month indicated a weaker appetite from both retail-level consumers and companies that use gold as a tool for financing,” said Liu.

via Bloomberg

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