(Kitco News) – The new year has been great for gold to say the least, with the metal rising over 7%, which has people questioning whether or not China’s New Year on Monday could also bring about another rally for the yellow metal.
Based on the latest sales data from the U.K’s mint, it just might.
As China prepares to usher in the Year of the Monkey – a holiday that tends to bring about heightened gold demand – the Royal Mint announced that it has sold out of its 2016 Lunar New Year one-ounce gold and silver coins.
“This is the first time that the Royal Mint’s bullion business has sold out of coins from its Lunar Shengxiào Collection and highlights the growing ambition of the business,” the mint said in a press release Friday.
Since the start of the year, gold prices have managed to jump back to multi-month highs as investors looked for a safe haven from tumbling equity and oil prices, and as concerns over the Chinese economy mounted. Gold futures have risen to levels last seen in October with April Comex gold last up $1.50 for the day at $1,159 an ounce.
The unexpected rally seen in gold has propelled retail demand higher, with market participants expecting the trend to continue. Celebrated annually, the Chinese New Year is traditionally a time for exchanging tokens and gifts of money in red envelopes, which is also why gold demand tends to rise during this time of year.
However, China’s affinity for gold doesn’t seem like it is going to fade anytime soon, especially as investors continue to seek safe havens and as the country’s central bank looks to increase its gold reserves.
Recent 2015 demand data showed that Chinese consumption rose 3.7% last year to 985.9 tonnes. U.K.-based research firm Capital Economics also noted in early February that the People’s Bank of China added another 19 tonnes of gold to its reserves in December, mounting total purchases in the second half of 2015 to about 104 tonnes. China’s gold imports also surged in December, the latest month for which import data has been released, Capital Economics highlighted.
Likewise, Thomson Reuters GFMS said in its Gold Survey report released last week that it expects gold demand to rise by 5% this year, with Chinese consumers playing a major role. As more individuals become concerned over the falling yuan, retail investors may seek gold as a store of value, other analysts have suggested.