Low gold prices seeing Chinese pile in again. SGE withdrawals exceeding new mined supply.

25-Jul (LawrieOnGold) — One of the big questions which the gold sector may be asking is what is the low gold price doing to Chinese demand. Have the Chinese become disillusioned with gold given they piled in so strongly in 2013 when Shanghai Gold Exchange withdrawals for the year hit a massive record 2,181 tonnes, but the gold price has largely been on a downwards path ever since.

We had already seen the beginnings of a pick up in Chinese demand, as expressed by SGE withdrawals, when they hit well over 60 tonnes for the week ended July 10th (see Huge latest week SGE gold withdrawal figure – 62 tonnes) all at a time when seasonality suggests Chinese demand should actually be at its lowest. But the gold price continued to fall so it would be particularly interesting to see how demand would continue, or whether it would actually increase with more bargain hunters climbing in. In the event, SGE withdrawals for the week ended July 17th have come out at the fifth highest weekly total ever – again, it should be emphasised that this high demand level has been at what is normally a very weak time of the year for Chinese demand – and brings SGE withdrawals for the year to date according to the chart below from Nick Laird’s excellent www.sharelynx.com and www.goldchartsrus.com charts sites to a huge 1,366 tonnes – probably nearly 80% of global new mined production over the same period.

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