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Gold has been on a record-setting blitz this year. But Chinese investors are increasingly turning their backs on the precious metal in favor of a surging domestic stock market.
In August, China’s wholesale gold demand fell to just 85 metric tons — nine tons lower than in July. It was also the weakest August since 2010, according to the World Gold Council in a Tuesday report.
“The August wholesale gold demand weakness mainly came from subdued bar and coin sales, as investors directed their attention to rallying equities,” wrote Ray Jia, the research head for China at World Gold Council.
The retreat came as gold prices on the London Bullion Market Association rose nearly 4% while China’s onshore benchmark gained 2%.
Prices of gold — a traditional inflation hedge and haven asset — hit a record high above $3,700 per troy ounce on Tuesday. Prices have been on the up this year thanks to Fed rate cut bets, geopolitical tensions, and President Donald Trump’s tariffs.
Wary, price-weary Chinese investors
In China, consumers have been reliable buyers of gold over the past two years, particularly after an ongoing property crisis and a stock market slump left few attractive investment alternatives.
Jewelry purchases rebounded in 2023 and 2024, and retail investors piled into gold ETFs as a hedge against economic uncertainty and a weakening yuan.
But 2025 has been different. Despite the People’s Bank of China adding to its gold reserves for 10 straight months, private demand has stumbled.
ETF investors pulled 6 billion Chinese yuan, or $834 million, in August, cutting holdings by 7.7 tons, according to the World Gold Council.
Gold futures trading activity on the Shanghai Futures Exchange also fell 26% from July to August.
Part of the problem is price fatigue: Gold’s relentless climb has deterred new buying.
The tonnage of gold withdrawn from the Shanghai Gold Exchange — the best proxy for wholesale demand — has remained muted throughout 2025 compared with historical averages.
Chinese equities catch fire
While gold demand has faltered, equities have surged.
The CSI300 Index, which tracks China’s largest companies listed in Shanghai and Shenzhen, jumped 10% in August and is about 16% higher year to date.
That surge came on the back of aggressive policy support, including liquidity injections and pledges to bolster consumer spending and technology investment.
Retail traders, often described as the lifeblood of China’s stock market, have poured back in. Daily equity trading volumes have swelled, coinciding with declines in gold futures activity.
The contrast underscores how investors are rotating out of traditional safe-haven assets and into riskier plays as confidence returns.
However, gold investment demand in China could rebound later this year, supported by seasonal buying around the National Day holiday in October and various jewelry fairs in September, according to the World Gold Council.
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