Swiss gold exports to the UK reached their highest levels in seven years last month, driven by strong investor demand for gold-backed exchange traded funds and a slowdown in demand for the metal in India and China.
Exports of gold from Swiss refineries to the UK rose by 24 per cent in August to 112.5 tonnes, according to Swiss customs data, making up 64 per cent of total Swiss gold exports for the month.
Inflows into gold-backed ETFs hit their highest levels since 2013 last month, as investors look for a hedge against a global economic slowdown and the prospects of a no-deal Brexit. The largest gold-backed ETF, the SPDR Gold Shares, is backed by gold stored in London.
Gold prices have rallied by 17 per cent this year to trade at $1,503 a troy ounce.
At the same time, physical demand for gold in jewellery and industrial applications in China and India has been weak this year, forcing banks to bring gold back to store in London, according to one bullion banker. Hong Kong demand has also been weak due to the protests in the city, they said.
“Physical gold demand has been nonexistent this year,” the banker said. “We’re seeing metal finding its way back into London from some of the refineries. It’s a last resort if demand is not there you bring it back into London.”
China, the world’s largest consumer of gold, has restricted imports of gold for most of this year, according to people familiar with the trade, due to concerns about outflows of US dollars. While restrictions were slightly lifted in August, it might be a one off, they said.
Imports of gold into India also fell by 73 per cent in August, as higher gold prices and a weaker rupee have put off buyers.