The World Gold Council released a report Tuesday showing a rebound of demand across Chinese gold markets in September as the country prepared for its early October National Day Holiday.
Ray Jia, head of research, China, at World Gold Council, said he doesn’t expect demand to drop soon.
“As Q4 arrives — the peak seasons for gold consumption — we expect gold demand to improve,” Jia wrote. “And as the government’s aggressive stimulus package gradually unfolds and the potential of further fiscal support lies ahead, we believe an uplift in consumer confidence and disposable income should help support gold jewelry consumption.”
Increased demand, but room to grow
Chinese nationals withdrew 118 tonnes of gold from the Shanghai Gold Exchange in September, a notable 11% month-over-month rebound. However, total withdrawals remain 18% below the 10-year average, meaning there could be room for more gold consumption.
On the paper side of the yellow metal, Jia reported Chinese gold ETF flows went positive in September, pushing assets under management to about $7.8 billion, or 91 tonnes.
China leads the world in gold ETF inflows.
This chart compares price gains between the Shanghai Gold Benchmark PM in Chinese renminbi and the LMBA Gold Price AM in U.S. dollars. (Souce: World Gold Council)
Gold stands alone in 2024
Gold has crushed Western investing alternatives during 2024, gaining about 30% thus far. Its performance compared to Chinese investment alternatives is almost identical.
Chinese commodities are up just 10% on the year, while gold priced in renminbi has gained about 24%. Compare that to this year’s 19% move of the S&P 500 or 12% move of the Chinese CSI300 stock index.
The performance of the Shanghai Gold Benchmark PM (SHAUPM) has dwarfed not just the S&P 500, but numerous Chinese alternatives during 2024. (Source: World Gold Council)
Central bank taking hands-off approach
Though physical demand has risen worldwide, the Chinese central bank has paused its reported purchases of gold for about the past six months, though global central banks are not required to report their assets.
In the latest data released by China, just 10 tonnes of gold was imported into the country in August, 27 tonnes lower than a very weak July and marking the lowest amount imported since February 2021 during COVID-related restrictions on imports.
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