China Gold Demand Steady Amid Rising ETF Inflows, Central Bank Buying

Analysts expect investment demand to remain firm amid rising geopolitical uncertainty and volatile global markets.

SEATTLE (Scrap Monster): Gold prices in China showed mixed movements in February, with the LBMA Gold Price continuing to climb in U.S. dollar terms while the Shanghai Gold Benchmark Price PM declined in yuan due largely to a stronger local currency. By early March, both benchmarks had stabilized above key levels.

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China’s wholesale gold demand remained relatively resilient during the Chinese New Year holiday month. Gold withdrawals from the Shanghai Gold Exchange totaled 85 tonnes in February, down 32% month-on-month because of fewer trading days but only 5 tonnes lower year-on-year, indicating steady market demand supported by pre-holiday restocking and solid investment interest.

Investor appetite also remained strong. Chinese gold ETFs recorded RMB4.5 billion (US$640 million) in inflows, marking the sixth consecutive month of net additions. ETF holdings rose to a record 290 tonnes, although total assets under management slipped slightly to RMB331 billion due to lower domestic gold prices.

Meanwhile, the People's Bank of China extended its gold buying streak to 16 consecutive months, increasing reserves to 2,309 tonnes, which now account for 10% of the country’s foreign exchange reserves.

Analysts expect investment demand to remain firm amid rising geopolitical uncertainty and volatile global markets.