Market and product

A rebound in international gold prices in the first quarter of 2016 has motivated Chinese gold producers to raise their output to 111.563 mt (3.59 million oz) over January-March, inching up 0.78% from a year earlier, the China Gold Association said Wednesday.

Production from gold mines accounted for 78.8% of China's total in the March quarter at 87.93 mt, edging 0.38% lower than the same 2015 period.

Gold produced as a by-product of base metals exploitation during the comparison periods grew 5.32% to 23.632 mt.

The country's major gold producers, such as China National Gold Group Corporation, Hunan Gold Group and Yunnan Gold, have reported double-digit growth in first-quarter mined gold production, the industry association said in a statement.

Top 10 Chinese gold producers-- including China National Gold, Zijin Mining, Shandong Gold, Shandong Zhaojin Group -- together contributed to 41.16% of the national mined gold production in January-March, according to CGA.

The March quarter saw monetary easing of world economies remain firmly in place, rising tension in the Middle East and the Korean peninsula, and the bulk commodities market finding a floor after sustaining weakness, CGA said.

Gold prices have risen to a recent high of $1,282/oz during the quarter, up 20.6% from a quarterly low of $1,063/oz in January, it noted.

But the association anticipates wide fluctuations in gold prices in the near future as the US economy recovers and the Federal Reserve pushes ahead with its plan of hiking interest rate.

Q1 GOLD CONSUMPTION SLIPS 3.91%

The country, however, consumed 3.91% less gold year on year at 318.28 mt (10.23 million oz) in the quarter.

Gold jewelry sales reported a 14.44% yearly decline to 193.57 mt in Q1 on the back of a slowdown in Chinese economic growth. Gold for industrial use also slipped 4.88% to 25.76 mt.

Demand for gold bullion, which rose 22.44% to 91.35 mt in January-March, partially offset the drop in jewelry sales.

Meanwhile, China's gold reserves reached 1,797.5 mt (57.79 million oz) by the end of March, as the country increased its holding by 35.15 mt during the three-month period, CGA reported, citing data from the country's central bank, the People's Bank of China.

Total gold trading volume at the Shanghai Gold Exchange reached 11,300 mt in the March quarter, a 45.32% spike on the year.

The Shanghai Futures Exchange reported a 79.05% surge in gold contracts to a total 22,300 mt in the quarter.