China’s Gold Market Performance in First Half of 2025
China’s gold market saw a modest performance in June, yet its overall showing in the first half of 2025 was impressive, according to Ray Jia, Head of Research for China at the World Gold Council. Despite a relatively flat month, the Shanghai Benchmark Gold Price and gold ETF inflows reached record-breaking levels for a half-year period.
The LBMA Gold Price in U.S. dollars edged up 0.3%, while the Shanghai Gold Benchmark (SHAUPM) dipped 0.7% in renminbi terms, largely influenced by a stronger Chinese currency. Still, both benchmarks delivered their most robust half-year gains since 2016, rising 23% and 21%, respectively.
Key Drivers Behind Strong Gold Prices
Jia attributed the strong gold price performance to ongoing geopolitical tensions and a weakening U.S. dollar, according to the World Gold Council’s Gold Return Attribution Model. Additionally, sustained buying by central banks, including China’s, contributed to the bullish trend.
However, June saw subdued activity on the wholesale side. Only 90 tonnes were withdrawn by manufacturers and banks, which was 10% lower month-on-month. Although this marked a slight 4% improvement from the same month in 2024, the figure remained well under the 10-year average, with consumer caution, high prices, and seasonal factors keeping retailers wary of replenishing their inventories.
Jewellery Demand Slows, but Investment Holds Ground
Gold withdrawals from the Shanghai Gold Exchange (SGE) totaled 678 tonnes over the first six months, a drop of 18% from the previous year and 22% below the decade-long average. Jewellery consumption has clearly felt the pressure of soaring gold prices, conservative spending habits, and an industry undergoing consolidation.
Yet the dip in consumer demand was partially balanced by strong investment interest. The surge in gold prices, heightened safe-haven demand—especially during the intense U.S.-China tensions in April—and the poor performance of other Chinese investment vehicles all contributed to stronger bar and coin sales.
ETF Market Strengthens Despite Cooling Demand
Gold-backed exchange-traded funds (ETFs) in China saw renewed interest in June, with net inflows of 1 billion RMB (roughly US$137 million), capping off the strongest first-half performance ever.
While easing trade tensions and a strengthening yuan reduced some safe-haven appetite, the first half still witnessed significant ETF inflows totaling US$8.8 billion. These gains were underpinned by the same factors supporting physical gold investment.
By the end of June, Chinese gold ETFs had increased their total assets under management by 116%, reaching RMB153 billion (US$21 billion), while total holdings rose 74% to 200 tonnes.
Central Bank Buying Continues; Imports Decline
Trading activity in gold futures on the Shanghai Futures Exchange (SHFE) dropped by 39% in June due to stabilizing prices and reduced volatility. However, the average daily trading volume in the first half still set a new semi-annual record at 534 tonnes.
Meanwhile, the People’s Bank of China maintained its consistent gold buying strategy, acquiring an additional 2 tonnes in June. This brought the central bank’s total gold purchases to 19 tonnes for the first half of 2025, raising its official gold reserves to 2,299 tonnes.
Gold imports, on the other hand, dropped to 89 tonnes in May, down 21% from the previous month and 31% year-over-year. Looking ahead, Jia cautions that ongoing low consumer confidence and industry restructuring could continue to restrain jewellery demand, though investment demand may remain solid in the months to come.
