China’s gold market showed a mixed but structurally significant picture in April, as the country’s central bank continued to accumulate reserves, exchange-traded funds attracted steady inflows, and physical jewellery demand declined in line with seasonal patterns.

While global gold prices ended the month broadly unchanged, China once again played a central role in shaping demand dynamics, driven primarily by official sector buying and sustained investment interest, even as consumer activity softened and equity markets gained momentum.

Gold prices were broadly flat in April. The LBMA Gold Price PM in US dollars rose 0.1 percent, while the Shanghai Gold Benchmark Price PM in yuan declined 0.4 percent, reflecting modest currency effects and regional pricing differences.

Early in the month, gold recovered from March weakness as easing geopolitical tensions in the Middle East reduced inflation concerns and contributed to lower bond yields. Later, however, renewed uncertainty surrounding the Strait of Hormuz pushed oil prices higher and reduced expectations for near-term Federal Reserve rate cuts, offsetting earlier gains and leaving gold directionless over the month.

Chinese gold-backed exchange-traded funds recorded net inflows of RMB 3.5 billion (approximately USD 498 million) in April, marking the eighth consecutive month of positive inflows.

Total assets under management rose to RMB 306 billion (USD 45 billion), an increase of 1 percent month-on-month. Total holdings increased by 3 tonnes to 301 tonnes, setting a new month-end record.

The continued inflows reflect sustained investor interest in gold as a portfolio diversifier amid ongoing geopolitical uncertainty and declining local government bond yields. However, inflows slowed slightly as capital rotated toward a rally in domestic equities.

Despite strong equity performance, gold ETFs continued to attract allocations as the domestic gold price stabilized above RMB 1,000 per gram in early May.

Trading activity in Chinese gold futures weakened further in April. Volumes on the Shanghai Futures Exchange declined 31 percent month-on-month to an average of 307 tonnes per day.

Despite the decline, volumes remained well above the five-year average of 265 tonnes per day, indicating that speculative participation remains structurally elevated.

The moderation in activity reflects reduced price volatility and increased investor focus on equity markets, which drew capital away from defensive assets during the period.

Wholesale gold demand in China weakened in April, with withdrawals from the Shanghai Gold Exchange totaling 103 tonnes, a 23 percent decline from March.

The drop reflects a typical seasonal pattern, as the second quarter is traditionally a weaker period for jewellery consumption. Retailers reduced restocking activity, while bullion demand also softened following earlier strength.

Additional pressure came from shifting consumer behavior toward services and travel, as well as stronger equity market performance, which reduced investor interest in physical gold.

On a year-on-year basis, wholesale demand fell 33 percent, partly due to an elevated base in April 2025, when demand reached its highest level for the month since 2018.

The People’s Bank of China added 8 tonnes of gold to its reserves in April, marking the 18th consecutive monthly increase and the largest monthly purchase since December 2024.

Total official gold holdings now stand at 2,322 tonnes, representing approximately 9 percent of China’s total foreign exchange reserves, which increased to USD 3.8 trillion.

The continued accumulation highlights a sustained diversification strategy by Chinese authorities, reducing reliance on foreign currency reserves and strengthening gold’s role as a strategic asset.

China’s net gold imports reached 143 tonnes in March, an increase of 49 percent from the previous month. The rebound contributed to a strong first quarter, with total net imports reaching 316 tonnes.

This represents a 182 percent increase quarter-on-quarter and a 333 percent increase year-on-year.

The surge reflects strong investment demand for bullion, partially offsetting weaker jewellery consumption. Favorable domestic price spreads also encouraged import activity throughout the quarter.

Looking ahead, seasonal patterns are expected to continue influencing demand in China’s gold market.

Jewellery consumption is likely to remain weak during the traditional off-season in the second quarter, although a stabilizing gold price may provide limited support.

On the investment side, demand is expected to remain supported by ongoing geopolitical uncertainty and low bond yields. However, strong performance in domestic equity markets may continue to divert capital away from gold, limiting near-term upside momentum.

China’s gold market continues to show a clear divergence between strong official and investment demand and weaker consumer activity.

The People’s Bank of China’s sustained accumulation, combined with continued ETF inflows, reinforces gold’s strategic importance in the country’s reserve and investment landscape. At the same time, seasonal softness in jewellery demand and reduced futures trading activity highlight a more cautious consumer environment.

Overall, while short-term momentum remains mixed, structural demand for gold in China remains firmly intact.