Developments in the Asian Gold Market
- Hong Kong is launching a trial gold clearing system in partnership with the Shanghai Gold Exchange (SGE) to compete with Singapore as a key trading hub (p. 2).
  - The SGE has approved the Hong Kong Precious Metals Central Clearing Company as an international member (p. 2).
  - Hong Kong is considering a new RMB-denominated gold futures contract and tax incentives for gold trading (p. 2).
- China has raised the permissible level of local investment in offshore Hong Kong Bonds by 60%, increasing quotas from almost $75 billion to $118 billion (pp. 1-2).
Discrepancies in China's Gold Reserves and Imports
- Reports indicate that China's gold imports reached 1,000 tonnes between January and August of the current year (p. 1).
- The People's Bank of China (PBoC) has a sporadic reporting history, characterized by long periods of no reported changes followed by large quantum leaps (p. 2).
- Calculations suggest there is over 3,000 tonnes of gold unaccounted for, which may be in official hands but not vaulted with the PBoC (p. 2).
  - From the start of 2015 to the end of 2025, there is a cumulative surplus of supply over demand of 3,862 tonnes (p. 3).
  - If all of this surplus were held in China's reserves, the percentage of gold in combined gold and FX reserves would drop fractionally to 19.5% at today's price (p. 3).
- According to June Bloomberg data, PBoC gold holdings stood at 2,346 tonnes, valued at just over $300 billion (p. 2).
  - Gold accounted for 8.8% of combined gold and FX reserves in May, down from 9.6% in January due to price declines (p. 2).
Global Precious Metals Supply and Demand Balances
- Gold: Total supply is projected to reach 5,230 tonnes in 2026 (up from 4,765 tonnes in 2022), while total demand is forecast to drop to 3,583 tonnes in 2026 (down from 4,812 tonnes in 2022) (p. 5).
- Silver: Total supply is forecast at 33,169 tonnes in 2026, with industrial demand projected at 26,593 tonnes and total demand including OTC and ETPs at 30,637 tonnes (p. 6).
- Platinum: Total supply is projected to decrease slightly from 7,334,000 ounces in 2022 to 7,323,000 ounces in 2027, with a physical surplus of 352,000 ounces expected in 2027 (p. 7).
- Palladium: Total supply is forecast to rise to 10,393,000 ounces in 2027, with autocatalyst demand remaining the largest driver at 8,100,000 ounces (p. 8).

China gold imports; and the mismatch in the supply-demand numbers

Interactive reader