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| Chinese consumers propelled gold demand in the past few years, but they are now piling into stocks. Ni Lifang/VCG/Getty Images |
Gold has been on a remarkable run in 2025, reaching record highs above $3,700 per troy ounce. Yet in China, one of the world’s largest consumer markets for the precious metal, investors are pulling back. Instead of buying more gold, they’re increasingly chasing opportunities in a surging domestic stock market.
Weakest August Gold Demand Since 2010
According to the World Gold Council, China’s wholesale gold demand in August dropped to 85 metric tons, nine tons lower than in July and the weakest August since 2010.
“The August wholesale gold demand weakness mainly came from subdued bar and coin sales, as investors directed their attention to rallying equities,” explained Ray Jia, the council’s head of China research.
This pullback came despite gold’s price rally. On the London Bullion Market Association, gold rose nearly 4% in August, while China’s domestic benchmark gained about 2%.
Why Investors Are Turning Away From Gold
For years, Chinese investors leaned heavily on gold as a hedge. With a shaky property sector, a weakening yuan, and sluggish equity markets, gold provided a sense of security. Jewelry demand surged in 2023 and 2024, while retail investors piled into gold ETFs.
But 2025 has marked a turning point. Despite the People’s Bank of China continuing to add to its reserves for 10 straight months, private demand has cooled:
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ETF investors withdrew 6 billion yuan ($834 million) in August, cutting holdings by 7.7 tons.
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Gold futures trading on the Shanghai Futures Exchange plunged 26% from July to August.
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Withdrawals from the Shanghai Gold Exchange — a key proxy for wholesale demand — have remained muted all year.
Much of this shift reflects price fatigue. After years of relentless increases, gold’s lofty prices are deterring fresh buyers who fear limited upside from here.
Chinese Equities Are Back in Focus
At the same time, China’s stock market has roared back to life. The CSI300 Index, tracking top companies in Shanghai and Shenzhen, surged 10% in August alone and is up about 16% year-to-date.
This rally has been fueled by:
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Aggressive policy support, including liquidity injections.
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Government pledges to boost consumer spending and investment in technology.
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A revival of retail trader activity, long considered the lifeblood of Chinese equity markets.
Daily trading volumes in equities have expanded sharply, coinciding with a drop in gold futures activity. The trend highlights how capital is rotating out of safe-haven assets and into higher-risk investments as investor confidence improves.
Seasonal Factors Could Revive Gold
Despite this retreat, analysts caution against writing off Chinese gold demand altogether. The World Gold Council expects a rebound later this year, driven by seasonal buying during the National Day holiday in October and increased activity from jewelry fairs in September.
For now, however, the story is clear: even as gold shines globally, Chinese investors are prioritizing the stock market’s rally over the precious metal’s record highs.
