Gold little changed after rising most in a week on China demand

by on January 9, 2013 6:32 am GMT

Gold was little changed after climbing the most in a week yesterday amid signs of increased demand in China before the Lunar New Year.

Spot gold was at $1,660.85 an ounce at 1:45 p.m. in Singapore, from $1,659.25 yesterday, when the metal snapped a three-day losing run. Cash gold rose 0.8 percent yesterday, the most since Jan. 2, as data showed imports by China from Hong Kong climbed to a seven-month high in November. Volumes for cash bullion of 99.99 percent purity on the Shanghai Gold Exchange yesterday were almost double the daily average in 2012, according to data tracked by Bloomberg.

“Weaker gold prices at the beginning of the year may spark increased demand in Asia’s physical bullion market” as buyers prepare for the Lunar New Year, Lynette Tan, a senior investment analyst at Phillip Futures Ltd., wrote in an e-mail. “The festival is a peak period for retail gold businesses in China and other countries in the region.”

In China, demand typically picks up before Christmas and lasts through the Lunar New Year in February. China’s net imports of gold, excluding flows from the mainland to Hong Kong, were 61,786.6 kilograms in November, data from the Census and Statistics Department of the Hong Kong government showed yesterday. That’s the most since April, according to Bloomberg calculations. China, set to overtake India as the world’s largest consumer, doesn’t publish such data.

China Gold

The increase in gold imports comes as output in China, the world’s largest producer, surged to 43.7 tons in November. That’s a monthly record, according to GF Futures Co.’s analyst Feng Liang. Gold for February delivery slipped 0.2 percent to $1,659.20 an ounce on the Comex. Futures climbed 1 percent yesterday, the most since Dec. 31.

Cash bullion of 99.99 percent purity gained 0.5 percent to 333.20 yuan a gram ($1,665.57 an ounce) on the Shanghai Gold Exchange. Volumes on the benchmark contract yesterday were 9,294 kilograms, compared to last year’s daily average of 4,666 kilograms. This follows a record 19,504.8 kilograms on Jan. 7.

Cash silver was little changed at $30.415 an ounce. Holdings in exchange-traded products climbed to an all-time high of 18,991.92 metric tons yesterday.

Spot platinum was unchanged at $1,581.25 an ounce, while palladium rose 0.2 percent to $674.75 an ounce.