China imported more gold again from Hong Kong in August

Gold climbed by 2% to a monthly high of over $1,150 per troy ounce yesterday on the back of a weaker US dollar and falling equity markets. It is trading somewhat below this level again this morning after Fed Chair Yellen more or less announced during a speech yesterday evening that an interest rate hike would be forthcoming before the year is out. 

According to data from the Census and Statistics Department of the Hong Kong government, China imported 59.3 tons of gold net from Hong Kong in August, which is more than double the year-on-year figure. Net imports were also up for the second consecutive month and reached a three-month high. The increased demand is doubtless due to the low gold prices seen in late July/early August, when they hit a 5½-year low. In the first eight months of the year, net Chinese gold imports from Hong Kong totalled 484.6 tons and as such were only marginally down on the same period last year, notes Commerzbank. 

Because China is now facing a period which traditionally sees the highest demand for gold - it begins with "Golden Week" in early October and continues until the New Year Festival in early February - gold imports should also continue to rise in the next few months, says Commerzbank. This in turn should lend support to the gold price. According to data from Thomson Reuters GFMS and Société Générale, the global hedge book fell by 17 tons to 177 tons in the second quarter. For 2015 as a whole, both now also expect to see moderate de-hedging activities of gold producers on balance. Mining companies clearly expect gold prices to rise in the medium term.