China's November net gold imports drop to 10-month low

China's net gold imports via main conduit Hong Kong in November dropped 17.84 percent from October to its lowest in 10 months, data showed on Thursday. Net-gold imports fell to 50.178 tonnes in November from 61.075 tonnes in October, marking its lowest since 33.041 tonnes reported in January this year, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.
Total gold imports fell to 63.508 tonnes from 67.165 tonnes in October. "Towards the year-end most banks have used up their quota and that's why the numbers have fallen," a trader with a Chinese import bank said. "The quota will only be renewed at the beginning of next year. Most banks will not be able to import much gold during the end of the year."
Earlier this month, gold premiums in China surged to over $40 an ounce, their highest in nearly three years, on fears of limited supply of the metal. The supply shortage, traders said, was due to Beijing's efforts to restrict import licenses. The import curbs may be part of China's efforts to limit yuan outflows after the currency's slide to 8-1/2-year lows last month.
China allows only 13 banks, including three foreign lenders, to import gold, according to the Shanghai Gold Exchange. Shanghai Gold Exchange, the world's biggest physical bullion exchange said on Wednesday it will curb the amount of gold investors can trade at one time, a move analysts said would limit institutional investors' influence on prices.
Spot gold dropped over 8 percent in November and touched its lowest since early February at $1,170.35 an ounce on November 30 as the US dollar scaled to near 14-year highs on soaring Treasury yields following Donald Trump's election as president.
Gold prices on Thursday rose to their highest in two weeks, but the metal is set to fall for a third consecutive month in December, hurt by the possibility of multiple interest rate hikes in 2017 by the US Federal Reserve. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding bullion. China does not provide official trade data on gold, so the Hong Kong figures serve as a proxy for flows to the mainland. The Hong Kong data, however, does not provide a full picture of Chinese purchases as imports also come directly through Shanghai and Beijing.