"Technical Picture Poor" for Gold Prices as GLD Sees Longest Ever Run of Outflows

GOLD BULLION imports to China through Hong Kong fell to a 3-month low in January, new data showed Friday, dropping by more than one-half from late-2012's build-up to the strong Chinese New Year period.

Net of re-exports, the total gold bullion inflow to mainland China fell below 30 tonnes for the month, according to figures from the Hong Kong government, down from almost 100 tonnes in December.

Hong Kong is the major route for bullion flows to and from China, the world's second-largest consumer market behind India and already the world's No.1 nation for newly-mined gold.

Last year saw China's net imports of gold bullion rise 56% from 2011 to a record 553 tonnes.

Lunar New Year 2013, which fell in early February, had seen a strong build-up in wholesaler stocks late last year.

On returning from the week-long New Year's holiday, China's bullion traders drove the premium on local gold – over and above London prices, the international benchmark – to some $20 per ounce.

"Delivery has finally arrived in the onshore market and physical stock seems widely available now," Reuters quotes bullion bank Scotia Mocatta's Hong Kong director Peter Tse.

"[Buying] should be done for now, and eventually the premium should move back to normal, about $5-$6 an ounce."

China's private gold demand has surged 350% by value in the last 5 years. Overall "luxury goods" spending has risen five-fold from 5% to 25% of the world total, according to data from HSBC bank.

However, luxury spending may be falling fast, according to local press, with Beijing restaurants and luxury goods retailers reporting poor trade.

The country's new leader Xi Jinping has banned "official extravagance" at this month's gathering of the National People’s Congress, seeking to deflect popular criticism of corruption.

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