Chinese Gold Market Outlook 2025: Trends in Demand and Stability
The Chinese gold market has been on a rollercoaster ride in 2024, with the local gold price skyrocketing by 28% by November, making it one of the best-performing assets in China. Factors like a weakening RMB, strong investment momentum, and economic uncertainties have all played a role in this surge.
The imbalance between supply and demand in the local gold market has been a key driver of this price surge, even though it’s challenging to pinpoint exact numbers due to data availability. The good news is that moving forward, we expect to see a stabilization in both the demand for gold jewelry and investment in 2025.
Despite the record-breaking performance of the local gold price, it has been a mixed bag for Chinese gold consumption. Affordability for gold jewelry consumers has been impacted by the high gold prices and slowing economic growth. However, these same factors have attracted investors to gold, resulting in the highest bar and coin investment levels in 11 years.
The desire for gold as an investment is evident through the significant increase in Chinese gold ETF holdings in the first three quarters of 2024. This surge in ETF demand has not only broken previous records but has also spurred a 21t increase in gold ETF demand in a single month, followed by a slight decline in November. Technology demand has remained stable, thanks to factors like the AI boom.
On the flip side, reported gold purchases from the People’s Bank of China have slowed down in 2024, marking the end of an 18-month streak of significant gold purchases. But overall, China’s total gold demand, which includes various factors like gold jewelry consumption, bar and coin investment, gold ETF demand, technology usage, and central bank purchases, has remained above its five-year average.
Looking ahead to 2025, Chinese gold demand will continue to be influenced by economic growth, the number of weddings impacting gold jewelry purchases, and changes in yields and the local currency. These macro drivers will shape the outlook for the Chinese gold market in the coming year.
