Depreciation of the yuan as well as increased economic and geopolitical risks have boosted demand for gold in China.
During the first half of the year, mainland China's gold imports from Hong Kong surged to 45.8 billion yuan or $6.8 billion, up 5.5 times from the same period a year ago.
Overall mainland’s gold imports totaled 173 billion yuan or $25.8 billion in the first half of 2016, South China Morning Post said citing customs data. Hong Kong is among China’s major suppliers of gold.
According to analysts, an increase in demand is due to a weaker yuan against the dollar, markets volatility as well as escalated geopolitical tensions in the region because of the territorial disputes in the South China Sea.
According to Jasper Lo, chief executive of Hong Kong’s King International, it is a good hedge for the falling value of yuan and many expect the yuan would continue to devaluate further this year.
