China, India are ‘changing the nature’ of gold bullion markets

by Myra P. Saefong
16-Jun (MarketWatch) — There is a shake-up in the gold market—and emerging markets like China and India are to blame.

Emerging-market demand is ‘changing the nature of the bullion market,” HSBC analysts, led by James Steel, said in a note on Tuesday.

…They also point out that emerging-market central banks have contributed to purchases and they expect official-sector buying this year to climb by 25%.

…But China’s imports are “still robust by any historical measure,” with 2014’s imports marking the second best year for bullion demand in the country’s history, they said. And so far this year, imports are running well ahead of the five-year average.

Consumers in important gold-consuming nations such as China, India, Indonesia, Vietnam and other emerging markets, “may have fewer tools at their disposal with which to protect savings and household wealth against rising prices or low or negative real interest rates,” the analysts said.

So gold in these markets remains broadly popular since it’s viewed as an “efficient and reliable store of value,” they said.

HSBC points out that annual per-capital consumption of gold in India and China is relatively low at one gram, but that also leaves “significant room for growth.”

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