Contrary to what investors often assume, the price of gold is not determined by consumer demand such as jewelry or coins. What drives the gold price is institutional (supply and) demand. Because the most liquid gold spot market is in London, this is where the price is set.

Where the gold is going is certainly no secret. Whilst the West has not got a clue of the strategic significance of physical gold, the East’s accumulation of the yellow metal continues unabated.

Since 2008 just China and India have accumulated 26,000 tonnes of gold. That is a remarkable figure and virtually the total mine production for that period. There are many other Eastern countries which also continue to buy major quantities of gold such as Russia, Turkey, Iran and Thailand.

Demand for physical gold was lower-than-usual during a key festival in the world’s second biggest consumer India as local prices peaked and a cash crunch curbed retail spending.

On Wednesday, Indians celebrated the annual festival of Akshaya Tritiya, when buying gold is considered auspicious.

The revised numbers from Singapore shine a new light on Chinese imports. Tellingly, Singapore has been a massive exporter to China since 2013. According to Statlink, Singapore net exported 102 tonnes to China in 2017, a record year and up 177 % from 2016.

Gold demand in China firmed this week as retailers stocked up ahead of the Chinese New Year while price discounts widened in India, partly on expectations of a reduction in import duty in next month’s budget.

Overall, within the 2013 – 2015 period that is about 4200 – 4600 tonnes of gold being converted into kilogram and other smaller denomination high purity gold bars and sent to markets in China, India, Hong Kong and elsewhere in Asia. This is gold above and beyond mine supply and scrap supply. Where has all of this gold come from? Some of it is proven to be from gold-backed ETFs. Some is most probably also from central bank vaults, in which case the central banks do not have the gold that they claim to have. Which everybody know anyway, as much central bank gold has been lent out and is merely a fiction on the central bank balance sheets. But there may also be other stockpiles of Good Delivery gold bars which are also feeding this huge trend. Until the LBMA begins to publish its vault statistics, any grey area unreported gold vault inventories in London are still being kept in the dark.

If the trend of raiding ETFs and borrowing central bank gold to send to Switzerland to convert into kilogram bars for the Asian markets continues, then this is not and cannot be sustainable. The question is how long it can remain sustainable, in other words when will it become unsustainable?

Gold exports from Switzerland totaled 170 mt in May, up 39% from 122 mt in April, Swiss federal customs data showed Thursday.

The total is largely unchanged from a year earlier, down 2% from 174 mt in May 2016, but is the highest volume of the year so far.

India was the largest destination for Switzerland's gold for the fifth straight month, with 68 mt exported in May, up from 18.5 mt in May 2016.

The volume is up 40% from April and is the largest export volume to the country for 18 months.

SINGAPORE's strategy to develop itself as a gold hub has proven successful, as its imports and exports almost doubled in the years after the goods and services tax (GST) was removed for investment-grade precious metals in 2012.

In numbers released for the first time, statistics from International Enterprise Singapore (IE Singapore) show that total imports and exports of gold in Singapore have expanded from 474 tonnes in 2012 - when the GST exemption started - to a peak of 823 tonnes in 2014 before falling to 618 tonnes last year.

Net-gold imports by the world's top gold consumer through the port of Hong Kong rose to 111.647 tonnes in March from 47.931 tonnes in February, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.