Price-sensitive Chinese consumers are driving up demand for the yellow metal at the current prices that are relatively weak. The demand surge is ahead of the Chinese Lunar New Year that falls in February.

While China’s gold import data by volume are unavailable, the figure is usually derived from value of imports and then converted into volume using current prices. This is corroborated by export data of supplier countries. Hong Kong is the main conduit from where a significant part of China’s imports arrive. Switzerland is the other origin.

According to latest data available, China’s net gold import from Hong Kong in November was 99 tonnes, well above the January-October monthly average of 65 tonnes. At the same time, Swiss export of gold to China is seen at 35 tonnes. Switzerland’s total export of the yellow metal to China is now estimated at about 200 tonnes in 2014.

Traders attribute the expanded volume of gold import to consumer-friendly prices and robust jewellery demand going towards New Year festivities.

There is now a belief that after China’s continuing large imports will lay a solid base for gold as we enter in 2015. Although gold prices have slipped below $1,200 an ounce, they have managed to stay closer to the upper-end. London PM Fix on December 29 was $1,186, higher than the previous day’s $1,177.

India’s imports are expected to slow with the end of festival and marriage season. A weakening rupee is exerting upward pressure to prices, making consumers wary.

Meanwhile, outflows from physically-backed gold ETP continue and are estimated at 135 tonnes this year. However, this is significantly below the massive outflow of about 900 tonnes last year. As of mid-December, total holdings were about 1,730 tonnes.

Surprisingly, despite a 20 per cent fall in prices, silver ETPs has seen a net inflow of about 250 tonnes this year. Total silver holdings are estimated at a little over 20,000 tonnes.

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