Wednesday, May 8th 02:19 PM IST

China Gold imports to hit record levels in 2013

# China gold  # largest gold consumer  # India gold  

China consumed a total of 320.54 tons of gold in the first quarter, surging 25.6 percent year-on-year.

BEIJING(BullionStreet): A day after China Gold Association announced sharp increase in gold consumption, the trade body sees record imports of the yellow metal this year.

A top official of the CGA said country's gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.

Zhang Bingnan, secretary-general of the China Gold Association said physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities.

"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.

April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.

That will help bolster prices for the metal, which has been abandoned by funds in other parts of the world in the wake of its historic fall.

China consumed a total of 320.54 tons of gold in the first quarter, surging 25.6 percent year-on-year.

China is the world's second largest buyer after India, and in both countries the steep fall in international gold prices in April unleashed years of pent up demand for coins, bars and jewellery.

Appetite for gold from India and China is a major factor in international gold prices. The two countries account for more than a third of global demand, according to the World Gold Council. China produced 403 tonnes of gold in 2012, but consumption was more than double at 832.2 tonnes.

With China's economy still on shaky ground, investors there with limited options for their cash could still see gold as attractive. The fall has hurt big funds elsewhere that bet on gold continuing a 12 year bull run, eroding investor confidence in the yellow metal.

China's annual export growth may have picked up slightly in April due to a low comparison from a year ago, while import growth probably eased, a Reuters poll showed, suggesting the underlying momentum for both the domestic and global economies remains tepid.

Meanwhile, China's gold imports from Hong Kong more than doubled as of March, reaching an all-time high at 223,519 kilograms.

The March number is up from 97,106 kilograms in February, according to Hong Kong government data released Tuesday, showing an increasing demand for bullion on the Mainland.

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