The sudden shake up in China’s equity market has pushed more Chinese investors into the tried-and-true gold safe haven, potentially supporting bullion-related exchange traded funds.

Year-to-date, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) have dipped about 1.0%.

However, after the plunge in Chinese stocks, with the Shanghai Composite in correction territory, more anxious investors have shifted into safe-haven gold.

Specifically, China’s gold imports through Hong Kong surged 36% month-over-month and 35% year-over-year to the highest level since January, reports Dhara Ranasinghe for CNBC.

“We think investors are becoming increasingly worried about a more pronounced correction in China’s stock market and will return to gold to diversify their portfolios,” Simona Gambarini, commodities economist at Capital Economics, said in a note.

The Shanghai Composite index experienced its largest single day decline in five months, falling over 7.4%, as investors exited positions on fears that the bull run may have been overdone.

Prior the the recent pullback, the rising Chinese equities market coincided with falling bullion demand. Net gold imports from gold declined to 52.2 tonnes in April from 66.4 tonnes in March.

However, with the Chinese equities market declining, the trade off may reverse and demand for gold could continue to rise.

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