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Informist, Wednesday, Sept. 17, 2025

MUMBAI – Investment demand for gold in China is expected to recover, driven by the rise in gold prices, after the slowdown seen in August, Ray Jia, research head (China) at the World Gold Council, said in a report. The demand for gold may also rise as jewellery retailers step up replenishment efforts ahead of China's National Day holiday in early October, he said. Several jewellery fairs in the country in September may support wholesale demand for gold.

In August, gold prices recorded another positive month because of expectations of higher inflation, the increasing probability of the US Federal Reserve cutting interest rates, and continued weakness in the dollar. Increasing safe-haven demand due to geopolitical and trade risks also supported gold prices, Jia said. At the London Bullion Market Association, the price of gold rose 3.9%. In Shanghai, the price of gold rose 2%. The narrower increase in Shanghai gold was mainly because of the appreciation of the Chinese yuan against the dollar. 

Wholesale demand for gold in China fell 9 tonnes on month in August to 85 tonnes, Jia said. On year, wholesale demand fell 17 tonnes, marking the weakest August since 2010. The on-month decline was against seasonality, where demand gradually picks up towards the end of the third quarter. "Conversations with industry participants indicated that the August wholesale gold demand weakness mainly came from subdued bar and coin sales, as investors directed their attention to rallying equities," Jia said. "Meanwhile, the lack of a clear trend in the gold price in most of August also led to investors waiting on the sidelines," he added.   

Chinese gold exchange-traded funds witnessed another outflow in August. The rising gold prices were insufficient to offset the outflow, leading to a 2% on-month decline in Chinese gold ETFs' total assets under management, which now stand at $21 billion. The ETFs' holdings fell 7.7 tonnes to 189 tonnes.

Gold futures trading volumes on the Shanghai Futures Exchange also fell 26% on month owing to investors' rising risk appetite and lower gold price volatility, Jia said. The People's Bank of China reported an increase of 1.9 tonnes in its gold reserves in August, the tenth consecutive monthly gold purchase by the central bank. "Now gold accounts for 7% of China's total foreign exchange reserves, standing at 2,302t (tonnes). Y-t-d (year-to-date), China has announced official gold purchases of 22.7t (tonnes)," Jia said.

China's gold imports reached 89 tonnes in July, where the imports rose by 50 tonnes on month and 53 tonnes on year, Jia said, citing data from China Customs. "We believe importers' anticipation of rising wholesale gold demand towards the end of Q3 and positive local gold price premiums in the month encouraged imports," Jia added.  End

US$1 = INR 87.81

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Reshma Ravi

Edited by Rajeev Pai

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