• 2 days Ireland Balks At Biden’s Global Tax Plan
  • 4 days Robinhood To Trade On Nasdaq Targeting $32B Valuation
  • 8 days Facial Recognition Is Watching You
  • 9 days Biden’s $3.5T ‘Human Infrastructure’ Workaround
  • 9 days The Fed’s $3 Trillion Headache
  • 12 days Why Bitcoin Could Struggle To Recover After Epic Crash
  • 13 days Wells Fargo Back In The Spotlight Over Personal Loan Cancellations
  • 14 days Delta Variant Real Threat To Economic Recovery
  • 17 days JEDI Drama Continues With Microsoft Contract Cut
  • 19 days DiDi Shares Take a Beating From Chinese Regulators
  • 19 days Thousands Of Companies Hit In Latest Ransomware Attack
  • 20 days Jobs Report Has Big Numbers, But Still Big Problems
  • 20 days Robinhood’s ‘Mission’ Questioned in $70M Fine
  • 24 days Didi Just Went Public, And Uber Is Loving It
  • 25 days Islamic Finance On Track To Hit $3.7 Trillion
  • 26 days The Lumber Bubble Is Bursting
  • 29 days A New Entry In The Two Trillion Dollar Club
  • 30 days 3 Upcoming IPOs To Watch As IPO Market Rebounds
  • 31 days Welcome To The Used Car Bonanza
  • 32 days The Year Of The Retail Investor Keeps Getting Bigger
Oilprice.com

Oilprice.com

Writer, OilPrice.com

Information/Articles and Prices on a wide range of commodities: We have assembled a team of experienced writers to provide you with information on Crude Oil,…

Contact Author

  1. Home
  2. Markets
  3. Other

Explaining The Sudden Drop In China’s Gold Production?

I wrote a few weeks ago about the lack of knowledge around China’s gold mining sector.

But this past week, a new report from within the country provided a rare glimpse into China’s gold production. Showing some unusual patterns in output and consumption — that could have major implications for the global gold market.

That report was released Friday from the China Gold Association, as reported by Platts. Detailing gold mining output, demand and imports for the first quarter of 2017.

Here’s the most interesting thing about the data: China’s Q1 gold production saw a significant drop. With the country’s mined output falling a full 9.3 percent during the January to March period — to 101.2 tonnes (3.25 million ounces), down from 111.6 tonnes during Q1 2016.

The reason for the production decline isn’t clear. With the report noting that Chinese gold miners have reduced output due to low prices.

That explanation however, makes little sense — given that gold prices during the past quarter have averaged around $1,200 per ounce, almost exactly the same as the same period of 2016.

So why is output falling? The report gave one clue, saying that gold miners have been phasing out some older production — part of Beijing’s plan to overhaul the mining sector in general.

If true, the shutdown of old and unprofitable gold mines could see China’s production reduced for a prolonged period. Great news for the global market, as it would mean Chinese buyers will need imports to fill the supply gap.

In fact, the Q1 numbers show a rise in imports already happening. With incoming shipments during the three months increasing 64.5 percent as compared to Q1 2016 — to 10.5 tonnes.

Even with that jump, the report said overall Q1 gold supply in China was 5.9 percent lower than a year ago. Suggesting that more supply is needed to fill the gap left by shuttered domestic mines.

That’s especially true given that Chinese gold consumption saw a big jump during the quarter, with demand rising 14.7 percent percent Keep an eye on these critical trends — if production stays reduced while demand stays strong, we could see increased imports here giving a lift to global prices over at least the next few months.

Here’s to filling the gap.

By Dave Forest 

Back to homepage

Leave a comment

Leave a comment