Shanghai Gold Exchange Withdrawals Are Strong
Gold's Price Outlook Remains Murky: Lack of Clear Catalysts
Shanghai Gold Exchange
Chinese (FXI) gold withdrawals from the SGE (Shanghai Gold Exchange) are a good indicator of China’s demand for physical gold. According to many gold experts, it’s close to the actual demand.
All of the mined and imported gold in China can only sell through the SGE. By tracking the data, investors can get a good idea of the short-term direction for demand in China.
The SGE also points to the short-term direction for gold prices (GLD). This impacts gold stocks like Agnico Eagle Mines (AEM), AngloGold Ashanti (AU), and Royal Gold (RGLD). It also impacts gold ETFs like the Market Vectors Gold Miners ETF (GDX). Agnico Eagle Mines and AngloGold Ashanti form 9.8% of GDX’s holdings.
Withdrawals up 18% YTD
The SGE releases gold withdrawal data every week. In 2014, the SGE withdrawals amounted to 2,102.4 tons. So far, 2015 has seen strong gold demand in China. Through May 1, 2015, gold withdrawals tracked by the SGE reached 820.58 tons. Withdrawals for the week ending May 1 were 38.4 tons. This is lower than the previous week’s figure of 50.8 tons. However, YTD (year-to-date), withdrawals have grown by 18.2% YoY (year-over-year). That is an impressive figure.
As we reported in our last gold indicators update , gold imports through Honk Kong into China have been weak. However, the strong run through exchange withdrawals shows that there’s still robust gold demand in China.
Gold-backed ETFs are large holders of physical gold, so it’s important to track their buying and selling trend. In the next part of this series, we’ll discuss gold ETF holdings.
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