China's net gold imports via Hong Kong in December rose for a second straight month, although imports for the year plunged by 85% as the coronavirus took its toll on the country's economy and dealt a blow to consumption of the metal.
Net gold imports via Hong Kong to China, the world's top gold consumer, stood at 5.6 tonnes in December compared with 3.3 tonnes in November, data from the Hong Kong Census and Statistics Department showed on Tuesday.
Total gold imports via Hong Kong to China rose to 11.2 tonnes from 8.8 tonnes in November.
"The pick-up in Hong Kong imports was likely the result of expectations for a physical demand bonanza during the Chinese Lunar New Year which meant lots of tonnage was on order," said Stephen Innes, chief global market strategist at financial services firm Axi.
Physical gold discounts in China eased in December and were substantially below the steep discounts offered earlier in the year
The country's imports via Hong Kong last month were still about 86% lower than December 2019's 41.4 tonnes.
Net imports stood at 40.9 tonnes in 2020 as a whole, sharply lower than 267.6 tonnes in the prior year.
"The 5.6 tonnes imported from Hong Kong in December is still very low and China not importing more in the last few months is surprising as the Chinese economy has recovered quickly and China's foreign exchange reserves have also risen," said Commerzbank analyst Daniel Briesemann.
The Hong Kong data may not provide a complete picture of Chinese purchases, as gold is also imported via Shanghai and Beijing.
Daily coronavirus infections in China have climbed to their highest since March 1.
"We do not think demand will pick up in February due to Chinese holidays, no new import quota issued by PBOC and more new (COVID) cases," said Bernard Sin, regional director for Greater China at MKS.
(Reporting by Nakul Iyer in Bengaluru, additional reporting by Swati Verma. Editing by Jane Merriman) ((email@example.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 0417; Reuters Messaging: firstname.lastname@example.org))