Demand Slowdown
Gold demand in China seen slowing in near term, says WGC's Ray Jia
This story was originally published at 12:58 IST on 15 May 2025
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MUMBAI – After witnessing strong a trend in April, demand for gold in China is likely to cool down in the near future due to profit taking, range-bound price movements, and easing of US-China trade tensions, according to Ray Jia, the World Gold Council's research head for China.
However, in the longer term, investment demand for gold should be well supported in view of its attractive performance, lingering global economic and geopolitical risks, and institutional allocations from Chinese insurers, Jia said in a report.
On strong wholesale demand in April, the industry withdrew 153 tonnes of gold from the Shanghai Gold Exchange, a rise of 27% on month and 17% on year.
"The rising wholesale gold demand is also reflected in the rising local gold price premium, which averaged US$37/oz in April, significantly higher than March's US$2/oz," the report said.
According to the report, gold remained a top-performing asset in China as US-China trade tensions intensified. It also noted continued robustness in bar and coin sales amid strong investor buying. Besides, jewellers were found re-stocking for the early May Labour Day Holiday.
China's exchange traded funds recorded their strongest month on record, adding $6.8 billion in inflows. Their assets under management rose 57% in April to $22 billion, while the holdings surged by 65 tonnes to 203 tonnes, also a record high.
However, the report said, "As we enter May, ETF demand in China remains positive, yet slows notably compared to April. This is likely due to investors having mostly priced in previous trade uncertainties – which have eased following the US-China Geneva trade talk – and a stabilisation of the local gold price."
April also saw Chinese investor interest in gold futures reaching unseen levels, the report said, adding that the average daily trading volume of SHFE's gold futures doubled on month to a record 859 tonnes. "We believe amplified gold price volatility and the strong gold price performance attracted trader attention, pushing volumes of gold futures notably higher."
The People's Bank of China, the country's central bank, continued to purchase gold for the sixth month in April, with gold reserves in China rising 2.2 tonnes in April. This lifted China's total gold reserves to 2,295 tonnes, accounting for 6.8% of the overall reserve assets.
Indicating that import of gold by China had slowed down, the report said the country imported 46 tonnes of the yellow metal in March, down from the 183 tonnes it imported a year ago.
"Weaker gold jewellery demand during the quarter was a key reason for the slowdown as it helped squeeze the local gold price premium, at times pushing it to a discount, which further discouraged gold importers," it noted. End
US$1= INR 85.57
Reported by Abhijit Doshi
Edited by Avishek Dutta
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