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James Hyerczyk
Gold, Silver

Back in March gold suffered pricing issues as coronavirus shut down supply sources. An unusually wide spread between gold prices for Comex futures and the London bullion market highlighted both pricing and delivery issues tied to the shutdowns of gold operations aimed at preventing the spread of the COVID-19 pandemic.

At that time, three of the world’s largest gold refineries – Valcambi, Argor-Heraeus and PAMP – suspended production in Switzerland for at least a week on the back of mandatory closure of nonessential industry in the country to prevent the spread of coronavirus, according to Reuters.

A report released on Tuesday showed some of the extent of the problem. To some, the huge rally in gold from March to May not only reflected a simple shortage of the precious metal, but problems with not having the right sort of gold, in the right location at the right time.

US Imports Record Amount of Gold from Switzerland as Virus Upends Trade

Swiss exports of gold to the United States leapt to 111.7 tonnes in April – by far the biggest monthly total on record – while shipments to other destinations dwindled, customs data showed on Tuesday.

The global gold market has been turned on its head by the novel coronavirus, with demand in China and India collapsing due to lockdowns while in the West investors rushed to buy bullion as a safe asset to weather a period of financial turmoil, Reuters said.

Additionally, high prices on CME Group’s Comex exchange spurred shipments to New York.

Switzerland meanwhile shipped 500 kgs (0.5 tonnes) of gold to India, 1 kg to Hong Kong and no gold at all to China in April. Each of these destinations usually receive tens of tonnes of metal from Switzerland each month.

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China Becomes Net Exporter of Gold via Hong Kong in April

China’s gold imports via Hong Kong in April fell short of its exports for the first time since at least 2011 as measures to contain the spread of coronavirus hammered demand in the top consumer of the metal, Reuters reported.

Hong Kong Census and Statistics Department data on Monday showed it became a net importer of gold from China last month for the first time in Reuters data going back to January 2011, receiving 10.3 tonnes versus exports of 13.5 tonnes in March.

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It’s interesting to note that Switzerland shipped no gold at all to China in April and China’s total gold imports via Hong Kong plunged more than 70% to 4,213 tonnes from 14,208 tonnes in March.

The moves indicate that the fall in shipments followed a slide in demand for the precious metal as the country battled the coronavirus pandemic. Additionally, dealers in top consumer China sold gold at discounts of up to $70 an ounce versus benchmark spot prices last month, the most on record according to data going back to 2014. At the same time, gold flowed out from mainland China to Hong Kong, thus turning from net imports to net exports in April, for the first time since 2011.

For a look at all of today’s economic events, check out our economic calendar.
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