August 13, 2026
The Chinese gold market showed a clear dichotomy in the first half of 2026: whilst demand for jewellery slumped amid record prices, physical investment products recorded strong growth. According to data from the China Gold Association (CGA), China’s total consumption rose slightly by 1.23 per cent to 511.41 tonnes (previous year: 505.21 tonnes).
Investment demand offsets slump in jewellery
High gold retail prices and changes to tax rules had a noticeable dampening effect on consumers. Nevertheless, there was a significant shift towards physical assets as a store of value:
• Jewellery: −33.88 per cent to 132.13 tonnes
• Bullion & coins: +28.42% to 339.34 tonnes
• Industry & other: −2.90% to 39.94 tonnes
Retail investors made targeted use of price corrections to make additional purchases via domestic banks. As a result, the investment sector more than fully offset the slump in the jewellery sector.
Domestic production slumps – strategic focus on physical metal
In parallel with the shift in demand, domestic supply contracted: China’s mining output from its own raw materials fell by 14.62 per cent to 152.91 tonnes. The main cause was regulatory environmental requirements and safety inspections, which led to temporary shutdowns. By contrast, the processing of imported ores rose by 4.62 per cent to 77.08 tonnes. Overall, domestic production thus fell by 9.01 per cent to 229.99 tonnes.
For commodity investors, market expert Willem Middelkoop (Commodity Discovery Fund) places these developments within a broader macroeconomic context. He sees a familiar pattern in China’s approach: the state is systematically using price dips to make strategic purchases – much as it has done with oil and copper.
Middelkoop does not interpret the recent consistent restriction by major Chinese banks on retail investors’ access to leveraged paper and futures trading on the Shanghai Gold Exchange (SGE) as a market crisis. Rather, he sees it as a state-directed measure to defuse speculative overheating and a targeted redirection of private capital away from paper-based derivatives towards physically backed holdings. By curbing leveraged trades, financial institutions are reducing systemic risks in the domestic market and forcing capital to be tied up directly in physical assets.
China thus remains the key driver of the global market: whilst high prices are dampening cyclical jewellery consumption, they are accelerating the strategic, long-term accumulation of physical metal. Against the backdrop of declining domestic production, this development is simultaneously exacerbating China’s structural dependence on imports of raw gold and ores – a trend that is likely to increasingly constrain physical liquidity on Western trading markets.
