China’s physical gold demand remained near decade lows in June despite falling gold prices, suggesting cheaper valuations have yet to revive the world’s largest gold market.
June withdrawals from the Shanghai Gold Exchange (SGE) rose 36% to 87 tonnes from May, but that increase followed the weakest May in 16 years while wholesale demand remained close to decade lows as weak jewelry consumption kept manufacturers from rebuilding inventories, the World Gold Council said in a report this week.
“Wholesale demand in June remained close to the lowest level seen over the past decade,” the WGC said, adding that “sustained weakness in jewelry consumption made manufacturers and retailers cautious about replenishing.”
China’s physical gold demand is closely watched by miners and investors because the country is the world’s largest consumer of the metal. Continued weakness in buying offers an important signal about the health of the global physical gold market
During the first half of 2026, investors and market participants withdrew 598 tonnes of gold from the SGE, a 12% lower year-over-year rate and 27% below the 10-year average, the WGC said.
Meanwhile, the gold price has been mostly steady for July and traded for $4,013.28 per oz. on Friday morning in Toronto, though it’s down by almost 8% from the start of the year.
Central bank buying
The People’s Bank of China bought 15 tonnes of gold in June, the highest purchase since October 2023. That extended the bank’s buying streak to 20 consecutive months, adding a total of 82 tonnes over that period, the longest on record, the WGC said. It raised China’s gold reserves to 2,346 tonnes.
However, the accelerated buying contrasted with continued weakness in China’s physical gold market, showing how different parts of the Chinese gold market have moved in opposite directions.
In addition, central bank gold buying continued throughout the year’s first half amid gold price volatility due to Middle East tensions and uncertainty over U.S. trade policy, as it booked a 40-tonne increase in holdings.
June ETF blip?
June also saw Chinese investors cashing out gold ETFs by RMB 15 billion ($2.2 billion), the worst month on record, WGC said. That represents the ETF holdings falling by 17 tonnes to 277 tonnes.
Combined with a decreasing gold price, that lowered Chinese gold ETFs’ total assets under management (AUM) by 16% to RMB 243 billion, the lowest since December 2025.
At the same time, the first half of the year was the second strongest H1 on record for Chinese gold ETFs, when demand totalled 29 tonnes and the total AUM gained by 1%.