China’s gold market lost some momentum in July, with signs of investor caution emerging across ETFs, futures, and imports, even as seasonal buying offered a slight lift to wholesale demand.
Gold prices edged higher during the month, rising 0.3% in USD terms and 0.5% in RMB, helped by a softer local currency. This follows a strong year-to-date rally of over 22% in RMB, placing gold ahead of most domestic asset classes.
On the wholesale side, withdrawals from the Shanghai Gold Exchange (SGE) reached 93 tonnes in July — up 3 tonnes from June and 4 tonnes from last year. While the increase was modest, it reflects typical seasonal patterns, as jewelry demand often picks up heading into the third quarter. Stable prices also encouraged some investors to purchase physical gold bars and coins. However, overall volumes remained well below the decade average, underscoring a slow year for jewelry restocking.
Gold-backed ETFs in China recorded net outflows worth RMB 2.4 billion (US$325 million) in July, trimming total assets under management by 1% to RMB 151 billion (US$21 billion). Holdings fell by 3 tonnes to 197 tonnes. Despite this dip, year-to-date inflows remain historically high at RMB 61 billion (82 tonnes). Analysts suggest the strong performance of domestic equities and firmer government bond yields reduced short-term investor appetite for gold ETFs.
Imports painted a weaker picture. June shipments totaled just 50 tonnes, down 45% from the previous month. For the second quarter, imports hit 250 tonnes, 18% lower than the same period last year. The first half of 2025 saw total imports slump to 323 tonnes, a steep 62% decline year-on-year, marking the weakest H1 since 2021.
Looking forward, seasonal factors are expected to support wholesale gold demand in the coming months, especially for jewelry. However, elevated prices may keep volumes muted. Investment demand for bars and coins will likely hinge on price trends and overall market sentiment, with stronger equity markets potentially drawing some capital away from gold.