China’s gold market finished the first half of 2026 with contrasting trends, according to the latest World Gold Council (WGC) report. While weaker gold prices weighed on investor sentiment and ETF demand during June, continued buying by the People’s Bank of China (PBoC), resilient bullion investment and a rebound in wholesale demand highlighted the market’s underlying strength.
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Gold Prices End H1 with First Semi-Annual Decline Since 2021
Gold prices weakened sharply in June after comments from newly appointed Federal Reserve Chair Kevin Warsh reinforced expectations of tighter US monetary policy. Rising real bond yields and a stronger US dollar reduced investor appetite for gold.
Both the LBMA Gold Price PM and the Shanghai Benchmark Gold Price PM declined approximately 11% during June.
The weak month erased earlier gains, leaving gold with its first first-half decline since 2021. International gold prices fell 8% in US dollar terms, while domestic prices in China dropped 10% in renminbi, partly due to the appreciation of China’s currency against the US dollar.
Chinese Gold ETFs Record Historic June Outflows
Chinese gold-backed exchange-traded funds experienced their weakest month on record in June.
Investors withdrew approximately 15 billion renminbi (2.2 billion US dollars) from gold ETFs, reducing total assets under management by 16% to 243 billion renminbi (36 billion US dollars). ETF holdings also declined by 17 tonnes, ending the month at 277 tonnes.
According to the WGC, lower gold prices and renewed enthusiasm for domestic equity markets encouraged investors to shift capital away from gold during the month.
First Half ETF Demand Remains Among the Strongest on Record
Despite June’s heavy outflows, the first half of 2026 remained one of the strongest periods ever for Chinese gold ETFs.
Net inflows reached 40 billion renminbi (5.6 billion US dollars) during H1, making it the second-strongest first-half performance on record.
Gold ETF demand totalled 29 tonnes, supported by geopolitical uncertainty, economic risks, continued central bank buying and rising participation from institutional investors.
Shanghai Gold Futures Activity Remains Elevated
Trading activity in Shanghai Futures Exchange (SHFE) gold contracts remained healthy despite softer prices.
Average daily trading volume increased slightly to 305 tonnes per day in June, remaining comfortably above the five-year average, although below 2025 levels.
Open interest declined 8% during June and stood 13% lower than at the end of 2025, reflecting more cautious market positioning.
Wholesale Gold Demand Rebounds After Weak May
Gold withdrawals from the Shanghai Gold Exchange (SGE) increased 36% month-on-month to 87 tonnes during June.
The recovery was mainly driven by restocking across the supply chain after lower gold prices encouraged manufacturers and retailers to rebuild inventories. Retail investors also took advantage of lower prices by increasing purchases of gold bars and coins.
However, overall wholesale demand remained below long-term averages due to continued weakness in China’s jewellery sector.
During the first six months of 2026, total SGE withdrawals reached 598 tonnes, down 12% from a year earlier and 27% below the ten-year average.
PBoC Continues Historic Gold Buying Program
One of the strongest pillars supporting China’s gold market remained the People’s Bank of China.
The central bank added 15 tonnes of gold to its reserves in June, marking its largest monthly purchase since October 2023.
China has now increased its official gold reserves for 20 consecutive months, the longest uninterrupted buying streak on record.
Total official gold holdings reached 2,346 tonnes, representing approximately 8% of China’s foreign exchange reserves.
The PBoC purchased 40 tonnes during the first half of 2026 and has accumulated 82 tonnes over the past 20 months, reinforcing gold’s strategic role as a reserve asset amid global geopolitical uncertainty and financial market volatility.
Gold Imports Ease Slightly
China imported 151 tonnes of gold during May, the latest month for which trade data is available.
Although imports declined modestly from April because of softer wholesale demand, they remained significantly higher than a year earlier as positive domestic gold price premiums continued to encourage imports.
China Gold Market Outlook
The World Gold Council believes China’s gold market remains supported by several long-term factors, including steady central bank purchases, resilient investment demand and elevated geopolitical risks.
However, gold prices could continue to face near-term pressure if US interest rates remain elevated and investor preference shifts toward risk assets such as equities.
FAQ’s
1. Why did China’s gold market weaken in June 2026?
Gold prices declined after hawkish signals from the US Federal Reserve strengthened the US dollar and pushed real bond yields higher, reducing investor demand for gold and triggering record ETF outflows.
2. Did Chinese gold ETFs see net outflows in June?
Yes. Chinese gold ETFs recorded their largest monthly outflow on record, with investors withdrawing around 15 billion renminbi, reducing assets under management and total holdings.
3. Why is the PBoC continuing to buy gold?
The People’s Bank of China continues to diversify its foreign exchange reserves and strengthen portfolio resilience, viewing gold as a strategic asset during periods of geopolitical uncertainty and market volatility.
4. How much gold did the People’s Bank of China buy in June 2026?
The PBoC added 15 tonnes of gold in June, its largest monthly purchase since October 2023, extending its gold buying streak to 20 consecutive months.
5. What is the outlook for China’s gold market?
The market is expected to remain supported by central bank purchases, geopolitical uncertainty and investment demand. However, higher US interest rates and stronger equity markets may continue to create short-term headwinds for gold prices.
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