Chinese investors are pouring money into gold funds at an unprecedented rate, as global economic uncertainties—exacerbated by the U.S.-China trade war and concerns over a potential recession and inflation—fuel demand for safe-haven assets.
According to the World Gold Council (WGC), inflows into gold exchange-traded funds (ETFs) in China have surged to 70 tonnes, or approximately $7.4 billion, so far this month. This marks more than double the previous monthly record, reflecting a dramatic increase in Chinese investment interest in the precious metal.
“While demand for ETFs has grown in other regions, China is currently leading the way,” said John Reade, Senior Market Strategist at the WGC. He highlighted that Chinese investment in gold has spiked dramatically this month, contributing significantly to global gold ETF inflows. China’s share of global gold ETF holdings has climbed to 6 percent, up from 3 percent at the beginning of the year, with Chinese demand accounting for more than half of global gold ETF inflows over the past month.
Gold has been one of the best-performing assets since the U.S. presidential election late last year. While other popular assets tied to “Trump trades”—such as the dollar, bitcoin, and stocks—saw early gains before reversing course, gold has consistently surged to new highs. The price of gold briefly rose above $3,500 per troy ounce last week, before retreating to around $3,300, marking a 26 percent increase since the end of 2024.
A sharp local price premium for gold in China also signals strong demand. Last week, the price of gold in China briefly exceeded the international price by $100 per troy ounce. This premium points to heightened domestic demand for the yellow metal.
Despite soaring prices, the gold buying frenzy continues, prompting the Shanghai Gold Exchange to issue warnings. “Investors should manage risks and make rational investment decisions in light of recent gold price fluctuations,” the exchange advised in a statement.
In China, tight capital controls limit investment options, which has made gold an increasingly attractive asset, particularly in the face of a struggling real estate market and a declining stock market. Gold’s appeal has grown as a safe and profitable alternative, with retail investors approaching gold much like they do stocks.
A client manager at a mid-sized brokerage in Shanghai noted, “It’s just like when stocks rise and retail investors rush to open securities accounts. With gold prices soaring, many believe that buying gold is a sure way to make money.”
China is already the world’s largest buyer of gold bars and coins, and the second-largest buyer of gold jewelry after India. However, the rise of gold-backed ETFs in the country is a more recent phenomenon.
Global gold demand, taking into account all forms of purchases, reached 1,206 tonnes in the first quarter of the year, marking a 1 percent increase compared to the same period last year, according to the WGC’s quarterly report. While jewelry demand fell by 21 percent due to higher prices, global investment demand for gold—including gold bars, coins, and ETFs—rose by 170 percent.
As a result of this surge in investment, the WGC has raised its gold investment demand forecast for 2025 by 160 tonnes at the midpoint, compared to its previous projections at the end of 2024.
“What we hadn’t anticipated was the flurry of policy pronouncements from the White House, the aggressive stance on tariffs, and the executive orders. All of this has heightened market uncertainty and triggered an unforeseen increase in investor demand for gold,” Reade explained.
In the first quarter of this year, a substantial stockpile of gold accumulated in New York, leading to a shortage in London as traders rushed to secure supplies ahead of potential tariff impositions. However, with recent announcements from the White House that tariffs will not apply to bullion, the gold flow is reversing, and inventories are beginning to be drawn down.
The surge in gold investment continues to reflect broader concerns about global economic stability, with China emerging as a key player in the growing demand for this precious metal.
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