Japan exported a net 6.1 tonnes of gold in July, making it increasingly likely that net exports of bullion will set a record this year, Ministry of Finance data showed on Tuesday.
Japan exported a total of 6.2 tonnes of gold in July and imported just 0.06 tonnes.
It is again a net gold exporter so far this year, with shipments at a net 49 tonnes in the first seven months following a record net outflow of 78 tonnes in 2010 as households cashed in on surging prices.
Traders and analysts say Japan's gold exports are expected to rise further in August as a surge in global gold prices spurred a selling rush of gold holdings by Japanese households, against the global trend.
Gold rose 8 percent in July and has climbed as much as 17.5 percent in August to a record high of $1,911.46 an ounce as investors sought safe assets in bullion amid the sovereign debt crisis in Europe and concerns over the U.S. economy.
Japanese do not necessarily see gold as a long-term investment asset but rather as something they can cash in for consumption, which is more attractive, said Akira Doi, a vice president at commodity brokerage Daiichi Commodities Co.
With Japanese interest rates staying so low, bank deposits don't offer returns, he said.
But an increasing desire by Japanese households to profit from a bullish gold market outlook may cap the country's total export volumes below the 2008 peak of 95.5 tonnes, just as they did in 2010.
Analysts expect gold to extend gains further given that the fundamentals which have supported the rally so far -- the debt crisis in the euro zone and worries over U.S. economic deterioration -- appear unlikely to change in the near future.
But some warn of a sharp correction, which could in turn either halt Japanese selling or prompt buying on dips, capping the outflow of gold from the country. Trading was volatile last week, when gold tumbled more than $200 towards $1,700 after reaching the lifetime high. On Tuesday it was around $1,795.
The market is up on anticipation of a further rally which would bring capital gains, but investors would have to sell at some point in order to book profits. So, while the probability is high for the current rally to continue, the downside risk is also heightening, said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.
Niimura said Japanese investors tend to wait until prices become low to buy on dips, and sell when they rise.
Japan turned a net gold exporter in 2006 for the first time since the ministry began compiling the data in 1988, and 2010 marked the fifth straight year of net exports.
Of the gold Japan exported in July, 54 percent went to Britain followed by 25 percent to Hong Kong. Switzerland accounted for 5 percent.
(Editing by Michael Watson)