U.K. Gold Imports Dominate Swiss Trade Data For Third Consecutive Month

(Kitco News) - The latest trade data from Switzerland demonstrates just how much the Brexit uncertainty has weighted on British consumers. For the third month consecutive month, the United Kingdom was the main destination for Swiss gold exports.

According to the data released Tuesday, 69.473 tonnes of gold was exported to the U.K. from Switzerland, slightly down from 78.8 tonnes in April. In the last three months, 192.273 tonnes of gold have flowed into Britain as voters struggle to decide whether to remain a member of the European Union.

Analysts from Commerzbank noted that the bullion into the U.K flowed mostly into the reserves of gold-backed exchange-traded products, which is a strong investment of choice among Western investors.

In total Switzerland exported 177.3 tonnes of gold in May, up 20% from April and the highest amount for the year so far.

Looking ahead, as Brexit fears start to diminish, Simona Gambarini, commodities economist at Capital Economics, said that she expects traditional gold markets to regain their dominance in the market.

The latest Swiss data showed that demand in India remains lackluster as exports fell to 18.5 tonnes last month, down 16% from April. Gambarini explained that last month, the Indian market was still adjusting to the 42-day strike organized by the nation’s Jewelry industry to protest the government’s high duty tax on gold imports.

“India has been the biggest surprise so far this year but we expect consumer demand to pick up as the strike factors dissipate,” she said. “We also expect demand to pick up following a positive monsoon season.”

Gambarini said that she expects Indian demand to pick up in the second half of the year ahead of the all-important wedding season.

After a lackluster start to the year, Swiss data shows that China’s gold demand is starting up pick up. Nineteen tonnes of gold were shipped to mainland China from Switzerland, an increase of 36% from April. At the same time, exports to Hong Kong grew to 24 tonnes, up a whopping 161% from April.

Gambarini noted that Chinese demand is relatively price sensitive, and it is not surprising demand picked up last month as the price saw a 6% correction.

In a recent report, Analysts at Thomson Reuters GFMS also highlighted price sentivity as a factor in recent Chinese lackluster interst in gold so far in 2016. However, they are also expecting sentiment to shift later in the year.

"We are likely to see some pent-up demand coming later in the year, particularly should we see a correction in gold prices below the $1,200/oz level. That said, we will not be surprised if total demand in China remains weak for the year as a whole, given that jewellery demand, which accounts for the larger share of total demand, has remained weak so far this year and is likely to remain under pressure due to the slowing economy," the analysts said. 

Courtesy: Kitco News