Chinese Gold Jewellery demand plunges 13% y/y in Q4: WGC

SHANGHAI (Scrap Register): Disappointing holiday sales contributed to a 13% year-on-year decline in Q4 gold jewellery demand in China, according to the World Gold Council.
According to World Gold Council, despite the fall in the gold price, gold jewellery demand fell far short of expectations during October’s ‘Golden Week’ national holiday. We have previously highlighted that younger Chinese, in particular, prefer to spend their income on experiences such as travel, rather than on material things, including gold jewellery. 
And that trend certainly seemed to play out in October: as the number of domestic tourists soared from the previous year, sales of gold jewellery slumped. Sentiment rallied in December, but consumer demand and trade stock building were constrained by tight supply. 
Towards the end of the year, as the lunar New Year loomed closer, demand recovered. Sentiment improved as the outcome of the US election cleared a key element of uncertainty from the market. Consumer interest picked up, sparked by lower prices. Retailers, optimistic for strong demand during the late January Chinese New Year festivities, placed chunky orders with manufacturers.
The uptick in demand sparked a surge in imports. These flows were not, however, sufficient to quench demand. A tightening of currency controls limited the amount of RMB banks could send overseas, which in turn affected the quantity of gold some importers could bring into the country. 
This fall in imports reduced the volume of gold available on the domestic market. The simultaneous rise in demand for jewellery, bars and coins caused a steep jump in the local premium on gold vs the global spot price, to almost $50/oz. 
Conditions stayed tight in the opening weeks of 2017, ahead of Chinese New Year. And while higher premiums may have triggered recycling activity in recent weeks, the trade may need to rebuild stocks throughout Q1, given December‘s sharp rundown of inventories.