China's Gold Demand Tops 500 Tons in First Half as Investment Surges

China's total gold consumption reached 511.412 metric tons in the first half of the year, up 1.23% year-on-year, according to data released by the China Gold Association and reported by People's Daily. The market saw a pronounced structural shift: demand for physical investment products such as gold bars and coins climbed 28.42% to 339.336 tons, while jewelry consumption tumbled 33.88% to 132.133 tons due to high price volatility and new tax policies. Meanwhile, the central bank extended its consecutive gold reserve increases to 20 months, holding 2,346.45 tons by late June.

The structural divergence in consumption illustrates how elevated prices dampen retail jewelry and industrial use while simultaneously fueling safe-haven and retail investment demand. Furthermore, the decoupling of higher trading turnover values against falling physical trading volumes on domestic exchanges highlights gold's expanding role as a high-value financial hedge.

China's gold consumption climbed 1.23% year-on-year to 511.412 metric tons in the first half of the year, driven primarily by strong investor appetite for physical bars and coins, according to data from the China Gold Association published by People's Daily. The domestic market experienced a pronounced structural divergence across sectors. Consumption of gold bars and coins rose 28.42% year-on-year to 339.336 tons, spurred by demand for defensive investment assets and price pullbacks that boosted commercial bank retail sales. Conversely, gold jewelry consumption dropped 33.88% to 132.133 tons, weighed down by high spot prices and the implementation of updated gold tax policies. Industrial and other uses of gold fell 2.90% to 39.943 tons as elevated raw material costs constrained manufacturing. On the supply side, total domestic gold production from domestic and imported raw materials decreased 9.01% to 229.988 tons. However, overseas mine operations run by large Chinese mining conglomerates performed robustly, producing 48.098 tons of mined gold abroad during the half, a year-on-year increase of 21.43%. Domestic financial trading reflected contrasting volume and value dynamics. Bilateral trading volume on the Shanghai Gold Exchange fell 4.37% to 32,100 tons, though total transaction turnover rose 36.75% to 33.14 trillion yuan. On the Shanghai Futures Exchange, gold futures and options bilateral volume dropped 22.46% to 117,100 tons, while turnover edged up 4.80% to 93.15 trillion yuan. At the end of June, the London spot fixing stood at $4,026.05 per ounce, down 8.22% from the beginning of the year, while Shanghai's Au9999 closed at 879.03 yuan per gram, down 11.21%. The China Gold Association cautioned that despite recent pullbacks, prices remain historically high and subject to intensified short-term volatility. China's official gold reserves rose by 40.12 tons over the six-month period, reaching 2,346.45 tons by the end of June to rank fifth globally. This marked the 20th consecutive month of reserve accumulation since November 2024.