While all eyes were on India (as rumors swirled of an imminent gold import ban), The FT reports that China curbed gold imports in the wake of government attempts to clamp down on capital leaving the country, according to traders and bankers.

Some banks with licences have recently had difficulty obtaining approval to import gold, they said — a move tied to China’s attempts to stop a weakening renminbi by tightening outflows of dollars, the banks added. The hit to gold imports comes as China tightens restrictions on overseas deals by state-owned companies in an effort to limit capital outflows that has seen the renminbi fall to its lowest against the dollar in eight years.

When the headline hit, gold futures legged lower, but are rebounding...

As The FT notes, quotas for importing gold have been cut during quarterly assessments this year. Banks also have dollar quotas, some of which must be used when buying gold.

The limits on imports bite as the weakening renminbi raises Chinese investors’ interest in gold. Lower gold prices have also triggered more buying. The combination of tighter quotas and an uptick in demand caused the premium for gold in China over the international gold price to jump as high as $46 in the past few weeks, according to data from Wind Information. Normal levels are about $2 to $4. In an effort to ease that premium, Chinese banks have been allowed to import gold under their quotas using the offshore renminbi, one banker said. Although still high, the premium for gold on the Shanghai Gold Exchange has since fallen to $26, according to Wind data.

If the restrictions on imports are sustained that could raise questions about China’s moves to open its gold market to international traders. The world’s largest consumer of the precious metal has moved to have a greater voice over the price of gold.