Latest data from the China Gold Association (CGA) shows China’s gold consumption rose 1.23% year-on-year to 511.41 tons in the first half of 2026, a modest increase from 505.21 tons recorded in the same period of 2025. Despite sustained downward pressure on gold jewelry consumption, robust investment demand largely offset the weakness in the jewelry segment.
The China Gold Association stated that the structure of gold consumption in China is undergoing a transformation. Wild volatility in gold prices near all-time highs, coupled with newly implemented domestic gold taxation policies, have jointly altered consumers’ purchASIng behavior. Market demand has diverged sharply between jewelry and investment products, driven by opposite underlying factors.
Sharp Drop in Gold Jewelry Demand
Driven by peRSIstently high retail gold prices, consumers’ willingness to purchase gold weakened, with gold jewelry demand plummeting 33.88% year-on-year to 132.13 tons. The association pointed out that steep end-user prices have led numerous consumers to adopt a wait-and-see attitude toward gold jewelry purchases, making the jewelry sector the biggest drag on overall gold consumption in the first half of the year.
In stark contrast, investment demand for gold bars and coins heated up markedly. Consumption of gold bars and coins in China reached 339.34 tons in the first half, representing a 28.42% year-on-year increase. According to the association, periodic pullbacks in gold prices have repeatedly spurred demand for gold bars purchased through domestic banking channels, as investors continue to seek allocation opportunities amid price swings.
Industrial Gold Consumption Declines in Tandem
Beyond gold jewelry, industrial and other non-investment gold applications also posted a decline. The China Gold Association explained that elevated gold prices have pushed up production costs for industrial manufacturers and weighed on related gold usage. Industrial and other gold consumption fell 2.9% year-on-year to 39.94 tons in the first six months.
From a broader market perspective, elevated gold prices are reshaping China’s gold consumption landscape: demand for traditional ornamental jewelry is suppressed, while physical investment products with value-preserving attributes have gained greater favor. This shift also implies that gold consumption may become more sensitive to price fluctuations going forward.
Domestic Gold Output Falls 9.01%
On the supply side, China’s domestic raw gold output dropped 14.62% year-on-year to 152.91 tons. The China Gold Association attributed the decline to comprehensive safety inspections, rectification campaigns and special environmental governance initiatives carried out in major gold-producing provinces, which forced some large-scale gold mines to suspend operations temporarily.
Nevertheless, gold produced from imported raw materials registered growth, climbing 4.62% year-on-year, or an increase of 3.40 tons, to 77.08 tons in the first half. All told, China produced a total of 229.99 tons of gold in the first six months, down 9.01% from the same period in 2025.
Attention Drawn to Adjustments in Banking Trading Channels
Meanwhile, the market is closely watching adjustments to retail gold trading channels within China’s banking system. Several major Chinese banks including Industrial and Commercial Bank of China (ICBC) suspended retail client access to trading on the Shanghai Gold Exchange (SGE) after settlement on July 24, covering both spot contracts and deferred settlement contracts (Au(T+D)). The information was released via bank announcements and reports from Chinese financial media outlets.
Precious metals market analysts believe the overhaul signals regulators and channel operators are guiding depositors toward physical gold holdings rather than paper-based trading. In an interview with Kitco News, Willem Middelkoop, Founder of Commodity Discovery Fund and author of *The Big Reset*, stated that the Chinese government actually prefers lower gold prices as it continues its ongoing gold accumulation. He added that the monetary "reset" he previously proposed is no longer a forecast but an already unfolding process.
Middelkoop remarked: “The monetary reset is a far more gradual process, not a black-and-white event. We are still in the early stages right now.” He added that China is a “very aggressive buyer on dips”, a strategy it also applies to copper and crude oil markets.
Regarding Chinese banks’ suspension of retail SGE trading, Middelkoop viewed the move more as a guidance shift steering depositors away from paper trades toward physical metals, rather than a restrictive crackdown. He also referenced China’s long-standing dual-track strategy and the policy of **Stockpiling Gold Among the People** documented in Chinese publications circa 2011 and 2012, arguing that China has “ultimately recognized that the key lies in holding physical assets”.