Following lower gold‑price volatility last month, trading volumes on China’s gold futures cooled while net long positions increased. Meanwhile, Chinese gold ETFs have returned to net capital inflows, a trend extending into August. According to Ray Jia, Head of Research for China at the World Gold Council (WGC), China’s gold market in July showed a split pattern: “rebounding investment demand alongside muted physical‑goods consumption.”
In WGC’s latest China gold‑market update, Ray Jia noted LBMA and Shanghai gold prices were nearly flat in July. Its gold‑return‑attribution model shows that US‑dollar weakness and improved investor positioning supported gold prices, offset by pressure from rising yields. Entering August, softer US labour‑market data and cooling inflation pushed back market expectations for Federal Reserve rate hikes, lifting gold further. RMB‑denominated gold broke above its 60‑day moving average for the first time since mid‑March, hitting roughly RMB 920 per gram.
Chinese Gold ETFs Return to Net Inflows
Data shows Chinese gold ETFs attracted USD 744 million in net inflows in July, reveRSIng sharp outflows seen in prior months. Healthy capital inflows lifted total assets under management (AUM) of Chinese gold ETFs by 3% to RMB 250 billion (approximately USD 37 billion). In tonnage terms, holdings rose 5 tonnes to 282 tonnes.
He explained July’s ETF demand rebound was underpinned by recurring geopolitical uncertainty, weaker equities and peRSIstent gold buying by the People’s Bank of China. Rising participation from institutional investors amid stabilising gold prices also lent support. Despite outflows in May and June, Chinese gold ETFs drew cumulative inflows of RMB 450 billion (roughly USD 6.3 billion, 34 tonnes) from January through July, marking the second‑strongest performance on record for the period. Ray Jia added that as of August to‑date, Chinese gold ETF holdings have grown by around 8 tonnes, with inflows recorded on nearly every trading day this month, driven by powerful upward momentum in gold prices.
Futures Trading Cools, Yet Net Long Positions Rise
Mirroring the ETF recovery, activity in China’s gold futures moderated in July. According to Ray Jia, average daily trading volume for gold futures on the Shanghai Futures Exchange (SHFE) fell 4% month‑on‑month to 292 tonnes as lower price volatility dampened trading enthusiasm.
Even so, market sentiment did not deteriorate materially. Subject to data availability, net long positions held by the top‑20 gold‑futures participants on the SHFE climbed 24 tonnes month‑on‑month to 117 tonnes at end‑July, signalling improved investor confidence.
Wholesale and Jewellery Demand Remain Subdued
In contrast to the investment‑segment revival, wholesale gold demand stayed sluggish in July. Wholesale demand — measured by gold withdrawals from the Shanghai Gold Exchange (SGE) by banks, jewellers and refiners — fell 8% month‑on‑month to 80 tonnes. Ray Jia attributed the drop largely to seasonal factors: the jewellery sector is typically quiet in Q2 and early Q3. Industry feedback also indicated investment demand was roughly flat versus June and could not offset soft jewellery‑related purchases.
Year‑on‑year, SGE withdrawals dropped 15%. This reflects peRSIstent pressure on jewellery consumption amid higher gold prices compared with one year earlier and still‑fragile consumer confidence.
Central‑Bank Gold Purchases Accelerate Further
The People’s Bank of China kept ramping up gold‑reserve purchases in July, adding 20 tonnes. Official gold holdings now stand at 2,366 tonnes, accounting for 8% of total foreign‑exchange reserves. Per Ray Jia, this marked the largest monthly addition since October 2023. The central‑bank’s unbroken gold‑buying streak has extended to 21 consecutive months, a new all‑time record.
In his view, the central bank may be stepping up purchases to seize opportunities during price pull‑backs. It also underscores gold’s strategic role in reserve diveRSIfication amid an increASIngly fragmented geopolitical landscape.
Rising Imports and Outlook for the Market
According to the latest available figures, China’s net gold imports rose to 152 tonnes in June, up 2 tonnes from May and hitting the highest monthly level since March 2024. Ray Jia noted China imported 764 tonnes of gold in the first half of this year, a sharp 138% year‑on‑year jump reflecting robust investment buying over the period.
Looking ahead, Ray Jia said Chinese investment demand may follow gold prices higher if the rally peRSIsts. On the other hand, a sustained rebound in domestic equities from early August could divert some capital away from gold. Meanwhile, wholesale gold demand may receive partial support as jewellers rebuild inventories ahead of seasonal demand peaks.