In China, as the price of gold reaches historic highs, the demand for investment in gold coins and small bars has nearly doubled that of jewelry investment in the spring of 2025. The demand for gold jewelry continues to remain sluggish.
According to the latest data released by the China Gold Association this week, in the first half of 2025, the demand for gold jewelry in China decreased by 26.0% in terms of weight compared to the same period last year. The total demand was less than 200 tons, continuing the dismal trend of jewelry sales during the Chinese New Year.
“The high price of gold has suppressed the consumption of gold jewelry,” the China Gold Association stated. “The demand for gold bars and coins has significantly increased.”
In contrast, the demand for gold coins and retail bars increased by 23.7%, reaching 264 tons. This means that during the period from April to June, due to the tariffs imposed by US President Trump leading to historical highs of $3500 per ounce in London and 830 yuan per gram in Shanghai, Chinese households purchased 126 tons of gold coins and bars, with only 65 tons being for jewelry.
The China Securities Journal commented on the data released by the China Gold Association, stating, “So far this summer, the demand for gold bars at jewelry stores remains strong, but both manufacturers and retail stores are experiencing declining profits.”
Leading market enterprise, Chow Tai Fook, released unaudited data this week showing that from April to June, its same-store sales on the Chinese mainland decreased by 3.3% compared to the same period in 2024, with sales volume dropping by 11.1%.
Traditionally, gold jewelry has been mainly used for wedding celebrations, gift-giving, and personal adornment. However, with economic growth slowing down and the financial pressure on middle-income families increasing, the consumption of gold jewelry has suffered a severe blow. Additionally, the rise in gold prices has also inhibited consumers’ purchasing willingness.
“Due to soaring gold prices, cautious consumer spending, and ongoing industry consolidation, jewelry demand has weakened,” said Ray Jia, Research Director of the World Gold Council China.
On the other hand, with factors such as continued adjustments in real estate, poor performance in A-shares, increased depreciation pressure on the Chinese yuan, as well as geopolitical tensions, gold has become a safe haven in households’ asset allocation as a “hard currency.”
Ray Jia also added that due to the surge in gold prices, increased hedging demand amid Sino-US trade tensions, and the sluggish performance of other domestic assets, the weakness in the jewelry industry is being offset by the strong investment in gold.
He stated, “This has supported the sales of gold bars and coins, while also stimulating speculative trading in Shanghai gold futures contracts.”
In his mid-year review, Ray Jia stated, “Gold wholesale demand in China slowed down further in June.” He mentioned that the amount of gold extracted from the Shanghai Gold Exchange’s settlement vault, granted for storage, has decreased.
As the only legitimate channel for private circulation of gold bars in China, the total amount of physical withdrawals from the Shanghai Gold Exchange in the first half of 2025 was 678 tons, a fifth lower than both the same period in 2024 and the average level of the past ten years.
In comparison, the trading volume of gold derivatives in China hit a nominal weight record high, reaching 534 tons per day, while inflows into listed gold ETF trust funds in China also set records.
Ray Jia further remarked, “Seasonal sluggishness, persistently low consumer confidence, and rising gold prices continue to put pressure on last month’s gold jewelry consumption, leading retailers to be cautious in replenishing stocks.”
Furthermore, due to investors taking a wait-and-see approach amid gold price fluctuations, the momentum in gold bar and coin investments cooled off in June.
The Epoch Times published an article titled “The Anxiety and Dilemma Behind the Polarization of the Chinese Gold Market,” stating that the polarization in the Chinese gold market reflects a combination of “asset scarcity,” idle funds, and the risk of malfunctioning monetary policy, indicating a reconstruction of the logic of ordinary household asset allocation and deep-seated anxiety among residents towards economic uncertainty. The sluggishness in real estate and stock markets is driving funds towards gold, while the failure of monetary policy is exacerbating the idle funds and lack of confidence.