China Accelerates Gold Purchases Amid Strong ETF Inflows and Weak Jewellery Demand

Mon Sep 14 2026

China accelerated its official gold purchases in August 2026, while investor inflows into gold-backed exchange-traded funds continued and futures market activity increased. Meanwhile, physical demand for bullion and jewellery remained weak under pressure from rising prices, according to the World Gold Council.

The People’s Bank of China added approximately 20.2 tonnes of gold to its reserves in August, marking its largest monthly purchase since October 2023 and lifting its officially reported holdings to 2,387 tonnes by the end of the month.

The central bank extended its gold-buying streak to 22 consecutive months, while gold’s share of China’s total foreign exchange reserves rose to approximately 9%, up from 8% in July.

The World Gold Council said the continued accumulation reflects the central bank’s efforts to diversify its reserves and strengthen their resilience amid growing global economic uncertainty and geopolitical tensions.

Gold Records Its Strongest Month Since January

Gold delivered its strongest monthly performance since January 2026. The LBMA Gold Price PM in US dollars rose by 13% in August, while the Shanghai Benchmark Gold Price PM in yuan increased by 8.4%.

The World Gold Council attributed the rally mainly to stronger investment momentum, supported by improved positioning in gold ETFs and futures, shifting expectations for US interest rates and growing concerns over US government debt.

The smaller gain in yuan-denominated gold reflected the appreciation of the Chinese currency and comparatively weaker domestic investment momentum.

However, gold’s momentum eased in early September after hawkish remarks from the US Federal Reserve Chair and strong US labour market data revived expectations of a rate increase later in the month. A weaker dollar provided some support to the precious metal.

Chinese Gold ETFs Attract Further Investment

Chinese gold ETFs attracted inflows equivalent to 11 tonnes in August, lifting their combined holdings to 293 tonnes.

Their total assets under management increased by RMB10 billion, equivalent to approximately US$1.5 billion, to RMB282 billion, or around US$42 billion. The increase was driven by both the rise in gold prices and fresh investment inflows.

Inflows continued during the first ten days of September, with Chinese gold ETFs recording net purchases during every trading session over the period.

Falling government bond yields, sluggish equity-market performance and the central bank’s continued gold-purchase announcements helped sustain investor interest in the metal as a hedge and portfolio-diversification asset.

Stronger Gold Futures Activity

Improved market sentiment was also reflected in the futures market. Average daily trading volume in gold futures on the Shanghai Futures Exchange rose by 36% month on month to the equivalent of 396 tonnes per day in August.

Net long positions held by the market’s top 20 participants increased by 37 tonnes from July to reach 154 tonnes, indicating stronger expectations of further price gains during the month.

Physical Demand Moves in the Opposite Direction

Despite the strength of financial investment, China’s physical gold demand registered an unusual seasonal decline. Gold withdrawals from the Shanghai Gold Exchange fell by 22% from July and 27% year on year to 62 tonnes in August.

Withdrawals from the exchange are widely used as an indicator of wholesale demand in China. Their decline therefore highlights a widening gap between robust gold investment and weak demand from the jewellery sector.

The World Gold Council attributed the contraction to cooling bullion investment momentum and continued softness in jewellery consumption. Some longer-term physical-gold investors remained on the sidelines while waiting for a clearer price trend, while others sought more attractive entry levels following the rally.

Higher prices and the additional value-added tax burden also weighed on jewellery consumption compared with the previous year. The industry’s shift towards lighter-weight products further reduced the amount of gold used, even where the number of items sold remained resilient.

Jewellery manufacturers recorded a limited increase in restocking as they prepared to launch new products in September and meet demand during the peak fourth-quarter season. However, rising price volatility in the second half of August encouraged businesses to remain cautious when rebuilding inventories.

July Imports Moderate

China’s net gold imports totalled approximately 118 tonnes in July, down by 34 tonnes from June, mainly due to softer wholesale demand.

Imports nevertheless increased by 34% year on year. The World Gold Council linked the annual growth to a higher domestic gold-price premium than in the corresponding period of 2025 and continued strength in bullion demand, despite weakness in the jewellery sector.

Fourth-Quarter Season May Support Jewellery Demand

The August figures reveal a clear divide within China’s gold market. While the central bank and financial investors continued to increase their holdings, consumers and jewellery retailers remained more cautious in the face of elevated prices.

The World Gold Council expects the direction of gold prices to remain the main driver of bullion investment, with falling yields and uncertainty in equity markets potentially providing further support.

Jewellery demand, meanwhile, could receive a seasonal boost as retailers and manufacturers rebuild inventories ahead of the peak consumption period in the fourth quarter.

Source: https://see.news