Big increase in gold moving from Hong Kong into China, partly seasonal, partly responding to the lower prices

The flow of gold from Hong Kong to China is a closely watched metric and it almost doubled in November from October, the latest data shows.

Hong Kong exported 90.7 tonnes in November the Hong Kong Statistics Department reported. 462 tonnes have been exported in the eleven months of 2012. For all twelve months of 2011, 380 tonnes were exported.

China and India are the main consumer gold-buying nations and as China does not publish gold import data, these Hong Kong releases are one way of assessing Chinese demand.

World demand has been soft for the precious metal in 2012 and so an up-turn in demand from China is likely to impact market prices.

"The picture is consistent with the overall idea that growth in China's gold demand has been a main driver of higher gold prices in past few years, and will quite likely continue," Rueters reported a Hong Kong-based trader as saying.

However, the gold inflow from China, possibly related to financing activities, could have distorted the data, the Reuters report said.

"The number is certainly very impressive, but there are all sorts of asterisks on this data series, which make it a bit ambiguous," the Hong Kong-based trader added.

Others suggested that the lower price in November triggered buying and the trend is continuing.

Physical buying interest from China, as well as India and Southeast Asia, has picked up rapidly in the past few days as weaker prices attract bargain hunters, ahead of the Lunar New Year in early February, which is seen as the peak season for gold consumption in China and other countries in the region.

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