Gold Flows East from New York and London Vaults

This summer’s dip in the price of gold has ignited demand in Asia, leading to massive shipments in the precious metal from western vaults to Asian markets. 

The amount of gold stored in bank vaults in London declined by 252 tons from April through September, according to the London Bullion Market Association. During the same period, gold stocks at New York banks shrank by about 275 tons, according to the CME Group, which operates trading in gold futures at the COMEX Commodity Exchange. 

In China, demand for gold, particularly for jewelry, has strengthened not only due to a lower gold price, but also thanks to the easing of COVID-19 restrictions. “China’s domestic supply is simply not able to meet domestic demand,” reports the World Gold Council. Indeed, gold imports to China via Switzerland hit a four-year high in August, and totaled 160 tons from May through August, according to Swiss customs authorities. 

During the same four-month period, India imported 80 tons through Switzerland, with Turkey importing 62 tons and Thailand 38 tons. Indian demand has been rising with the approach of the Diwali holiday on October 24, the Hindu festival during which time it is traditional to give gifts of gold.

The flow of gold eastward typically occurs when world prices drop and speculators rush out of gold positions. Asian demand acts as a floor on gold prices during such times. On the flip side, when the price of gold rebounds and speculators pile in, gold stocks increase at bank vaults in London and New York.