China's net gold imports via Hong Kong steady in February

China's net gold imports via Hong Kong in February were little changed versus the previous month, Hong Kong Census and Statistics Department data showed on Thursday, after the central bank did no issue any new import quotas.

Net gold imports via Hong Kong to China, the world's top consumer of the metal, fell 0.2% to 4.192 tonnes in February, compared with 4.2 tonnes in January, the data showed.

Net imports fell more than 8% from same month last year.

"Import is still restricted. There were no quotas issued by People's Bank of China (PBOC) in February," Bernard Sin, Regional Director, Greater China at MKS Switzerland, said.

The PBOC could grant gold import quotas to appointed banks in late March or early April on the basis of firm demand for the metal, he added.

Total gold imports via Hong Kong fell over 30% to 5.386 tonnes from 7.751 tonnes in January, but rose nearly 6% from February 2020.

Physical gold traded at a discount to global spot prices most of last year in China as the COVID-19 pandemic reduced consumption.

"The collapse in demand last year may well mean that there is inventory available, quite possibly from the Shanghai Gold Exchange," StoneX analyst Rhona O'Connell said.

"Demand (this year) has been strong, partly reflecting the release of pent-up demand, which is why Shanghai has been trading at a premium to Loco London recently," she added.

Benchmark spot gold prices fell over 6% last month, pressured by a surge in US Treasury yields, while premiums in China ranged from $0.50 to about $8 in the same period, boosted by Lunar new year festivities.

The Hong Kong data may not provide a complete picture of Chinese purchases, as gold is also imported via Shanghai and Beijing.