May 18, 2026
In April, the Chinese gold market presented itself as a fascinating two-tiered society: while physical consumption at the grassroots level cooled noticeably, institutional investors and the government continued to pour billions into the precious metal undeterred. A market is emerging that is decoupling itself from short-term price fluctuations and is instead dominated by hard-nosed strategic purchases.
Geopolitics keeps the price in a sideways stranglehold
In terms of price, gold largely treaded water in April. The LBMA Gold Price PM recorded a marginal gain of 0.1%, while the Shanghai Gold Benchmark Price PM fell by 0.4%. Geopolitical ups and downs shaped the picture: An initial easing of tensions in the Middle East pushed bond yields lower and initially supported the precious metal. Shortly thereafter, new uncertainties surrounding the Strait of Hormuz drove up oil prices, dampened hopes for rapid U.S. interest rate cuts, and took the wind out of gold’s sails. Yet while the price stabilized, massive transactions were taking place behind the scenes.
The driving forces: ETFs, the central bank, and imports
Despite burgeoning competition from a resurgent Chinese stock market, financial investors and the central bank continued their accumulation unabated. The figures from the World Gold Council speak for themselves:
- ETFs on a record-breaking streak: For the eighth consecutive month, Chinese gold ETFs recorded inflows—specifically 3.5 billion renminbi (498 million USD). Holdings rose by 3 tons to a new month-end high of 301 tons. Assets under management thus climbed to 306 billion renminbi (45 billion USD).
- PBoC buys relentlessly: The People’s Bank of China (PBoC) increased its gold reserves by another 8 tons in April, bringing the total to 2,322 tons. It was the 18th consecutive monthly purchase and the largest since December 2024. Gold now accounts for 9% of total foreign exchange reserves (USD 3.8 trillion).
- Massive Q1 imports: Net imports underscore the massive appetite for the metal. In March, these rose to 143 tons (+49% month-over-month). The first quarter closed at 316 tons—a massive jump of 182% from the previous quarter and 333% year-over-year.
Sluggish consumption and declining trading volumes
On the flip side, there is a noticeable slowdown in physical wholesale trading, which coincides exactly with the start of the traditionally weaker seasonal phase in the second quarter. Gold withdrawals from the Shanghai Gold Exchange fell by 23% month-over-month in April to 103 tons. However, the 33% year-over-year decline is significantly mitigated by the fact that April 2025 marked the highest demand since 2018.
The trend is nonetheless unmistakable: Chinese consumers are currently preferring to channel their capital into experiences and travel rather than traditional jewelry. While there was some light restocking ahead of the May 1 holidays, the major surge failed to materialize. Even physical bullion buyers have recently hesitated, lured by the renewed appeal of the domestic stock market.
This caution was also evident in the futures market. Trading volume on the Shanghai Futures Exchange fell by 31% to 307 tons per day. However, the fact that this figure remains significantly above the five-year average of 265 tons per day demonstrates the market’s underlying strength.
Outlook: The market remains divided
This two-pronged picture is likely to persist in the coming months. Demand for jewelry and bullion is expected to remain weak during the seasonal lull, especially if the stock market remains strong as a competitor for capital. However, strategic and financial demand via ETFs and the central bank forms a massive foundation that cements China’s position as an indispensable anchor in the global gold sector.
