China gold market update: Wholesale demand rebounded

Another record-shattering month

Gold’s strength continued in September. The LBMA Gold Price PM recorded its largest monthly increase since January 2012 and its strongest quarterly performance since Q1 2016. But more notably, the SHAUPM registered its strongest month on record and its second strongest quarter ever with a 14% gain—just behind Q1 2025’s 18% surge. 

Having reached record highs 36 times during the first three quarters of 2025, the SHAUPM’s y-t-d return extended to 36%, to date the best year on record (Chart 1). The LBMA Gold Price PM jumped 43% between January and September, the best y-t-d performance since 1979. Gold’s relatively weaker return in China was mainly due to a 4% appreciation in the RMB against the dollar during the period. 

It is also worth noting that the gold price has carried its bullish momentum into October, with the LBMA Gold Price PM breaching the US$4,000/oz threshold for the first time ever on 8 October and the SHAUPM surging nearly 5% during the month’s first trading day.¹

Wholesale demand ended Q3 with an improving September 

Wholesale gold demand saw a 33t m/m rebound in September, reaching 118t; 4t higher y/y (Chart 2). Nonetheless, it remained 33% below the long-term average. Our interactions with market participants inform us that as the gold price resumed its uptrend, bar and coin sales improved during the month, supporting wholesale demand. But some investors took the opportunity to book profits by selling their holdings. 

September usually brings a seasonal uplift from manufacturers’ new product launches and retailers’ pre-Golden Week holiday restocking. Yet this year, soaring gold prices and doubts about future sales have tempered retailers' restocking enthusiasm.

During the first three quarters of 2025 wholesale gold demand reached 297t, a mild 3% y/y fall and 37% below the ten-year average (Chart 3). In this quarter, weakness in the gold jewellery sector outpaced investment strength. For details on gold demand changes in Q3 and our outlook, please stay tuned for our Gold Demand Trends report, which will be released on 30 October. 

Early Q3 Chinese gold ETF losses partially reversed by a positive September

Chinese gold ETFs finally saw inflows in September, following two consecutive monthly losses (Chart 4). Attracted by the strong gold price performance, Chinese investors bought RMB4.5bn (US$622mn) of local gold ETFs. September’s inflows and the surging price lifted Chinese gold ETFs’ total AUM to another month-end peak of RMB169bn (US$22bn), with holdings rebounding by 4.9t to 194t.

But September’s inflows were not sufficient to reverse earlier losses, resulting in Q3 net outflows of RMB3.8bn (US$537mn) (Chart 5) and collective holdings reduced by 5.8t during the period. As previously noted, Chinese investor risk appetite improved as the need for safe-haven assets declined: July and August saw better growth expectations on the back of strong Q2 economic data and a reducing US-China tariff risk. This sentiment was reflected in the strong CSI300 Stock Index rally, which surged 18% during Q3, the strongest quarter since Q1 2019. Meanwhile, rising government bond yields – as the market priced in fewer rate cuts by the PBoC – increased opportunity costs of holding gold. 

Nonetheless, helped by various uncertainties, the strong price performance, a lack of alternative investment options, and encouragement from the central bank’s non-stop gold buying, Chinese gold ETF inflows during the first three quarters remain the largest ever. In fact, the cumulative inflows of RMB59bn (US$8.2bn, 79t) between Q1 and Q3 have surpassed all previous annual records (Chart 5). 

Gold futures investor activity also improved (Chart 6). The average trading volumes of gold futures at the SHFE jumped 70% m/m to 394t/day in September; 82% higher than the five-year average. The strong gold price performance and rising volatility attracted attention from tactical investors. Yet Q3 volumes fell 49% q/q to 312t/day despite the gold price rally proving stronger than the previous quarter – Q2 gold price volatility climbed to the highest in decades, a key factor luring interest from futures traders. 

The PBoC reported its 11^th consecutive monthly gold purchase 

In September the PBoC announced a 1.2t gold purchase, its 11^th non-stop addition. By the end of Q3 China’s official gold holdings stood at 2,303t, 7.7% of total foreign reserves. 

China’s gold reserves increased by 5t, a slower pace than in previous quarters (Chart 7). This is perhaps not surprising: as the gold price surges central banks may dial back the amount of gold buying for tactical reasons. Yet judging from the PBoC’s four-quarter non-stop gold purchases, we believe gold remains a key strategic asset to central banks looking to diversify assets in a fragmented and uncertain world. 

Imports stable in August

China imported a net 87t of gold in August, based on the latest information, a mild 2t m/m fall (Chart 8). Imports remained broadly stable as the average local gold price premium fell only slightly in the month (US$7.6/oz in August vs US$8/oz in July); the upcoming peak season for gold also limited the m/m weakness.

Footnotes:

¹Chinese markets were closed between 1 and 8 October due to the National Day Holiday and the Mid-Autumn Day.