Based on World Gold Council Data | February 2026
+14%
LBMA Gold Price
January 2026 (USD) +19%
SHAUPM Price
January 2026 (RMB) RMB 44bn
ETF Inflows
Strongest Jan ever 2,308t
PBoC Reserves
15th consecutive buy
- Case Study: China’s Gold Market in 2025–2026
1.1 Historical Context and Market Structure
China is the world’s largest gold consumer and producer, consistently accounting for approximately 25–30% of global gold demand. The country’s gold market is anchored by the Shanghai Gold Exchange (SGE), which facilitates physical bullion trading, and the Shanghai Futures Exchange (SHFE), which hosts derivative instruments. The People’s Bank of China (PBoC) additionally functions as a significant institutional actor, maintaining official reserves that carry both monetary policy and geopolitical signalling dimensions.
Gold demand in China is driven by three broad segments: jewellery consumption (driven by cultural affinity and gift-giving, particularly around the Lunar New Year and other festivals), bullion investment (bars, coins, and savings products), and institutional/ETF demand. The relative weight of each segment has shifted materially in recent years as investment motives have gained prominence over purely ornamental consumption.
1.2 The 2025 Contraction: Structural Demand Headwinds
Full-year 2025 represented a year of significant contraction in China’s physical gold import and jewellery channels. Net gold imports for 2025 totalled 675 tonnes — a 41% decline year-on-year. This deterioration reflected two mutually reinforcing dynamics:
Sustained weakness in gold jewellery consumption, driven by elevated domestic prices that eroded purchasing power for volume-sensitive buyers, particularly in lower-tier cities;
Persistent local gold price discounts relative to international benchmarks, which reduced the economic incentive for commercial importers and refiners to bring metal onshore.
Structurally, the jewellery segment has been squeezed by both price and demographic headwinds: younger Chinese consumers have demonstrated lower propensity to purchase traditional jewellery, and the high-price environment has shifted gifting behaviour toward lighter-weight or lower-karat items, reducing aggregate gold content per unit sold.
1.3 The January 2026 Surge: A New Market Regime
January 2026 marked a sharp inflection point. Gold prices surged to levels not seen in decades, with the LBMA Gold Price PM in USD recording its highest January return since 1980, and the SHAUPM in RMB posting its strongest opening month ever. Within the month, gold established 11 successive all-time highs before retracing at month-end.
Metric January 2026 Year-on-Year Change
LBMA Gold Price PM Return (USD) +14% Highest Jan since 1980
SHAUPM Return (RMB) +19% Strongest Jan on record
SGE Wholesale Withdrawals 126t +1t y/y, +11t m/m
Chinese Gold ETF Inflows RMB 44bn (~38t) 2nd strongest month ever
Chinese Gold ETF AUM RMB 333bn +38% m/m, all-time high
Chinese Gold ETF Holdings 286t All-time high
SHFE Gold Futures Daily Avg Vol 456t/day +17% m/m, +72% vs 5yr avg
PBoC Gold Reserves 2,308t (9.6% of FX reserves) +1.2t (15th consecutive month)
Net Gold Imports (Dec 2025) 29t -55t y/y
Several causal factors underpinned the January rally:
Geopolitical risk premiums: Elevated uncertainty in global trade and security environments maintained a systemic bid for safe-haven assets;
Monetary easing expectations: Declining domestic bond yields in China, and expectations of further People’s Bank of China rate cuts, reduced the opportunity cost of holding non-yielding gold;
Institutional participation: A notable expansion of local institutional investor allocation to gold ETFs, a category previously dominated by retail participants;
Dollar dynamics: Persistent questions regarding USD reserve currency status amid ongoing de-dollarisation trends contributed to gold’s appeal as an alternative store of value.
1.4 Central Bank Accumulation as a Structural Signal
The PBoC’s 15th consecutive monthly gold purchase in January 2026 — adding 1.2 tonnes to bring official holdings to 2,308t — reinforces a broader trend of emerging market central bank accumulation that has been a dominant structural feature of the gold market since 2022. With gold representing 9.6% of total Chinese foreign exchange reserves, the PBoC’s sustained buying sends a clear signal: gold is increasingly being treated as a core strategic reserve asset, not merely a residual holding.
This behaviour is mirrored globally. Central banks collectively purchased record quantities of gold in 2022 and 2023, driven by a desire to diversify away from USD-denominated assets following the precedent set by Western sanctions on Russian reserves. China’s continued accumulation in a high-price environment underscores the policy imperative over purely price-sensitive commercial considerations.
- Market Outlook: China Gold Demand 2026
2.1 Near-Term Catalysts and Seasonal Dynamics
The Chinese New Year holiday period (15–23 February 2026) represents a historically significant demand window for both jewellery and bullion. Gift-giving traditions and the cultural symbolism of gold during the Spring Festival typically generate a measurable seasonal uplift in retail purchasing. However, the persistence of elevated gold prices is likely to constrain volume-based jewellery demand, with consumers gravitating toward lighter or more affordable items.
A growing trend in the near-term is the rise of old-for-new jewellery exchange programmes, where consumers trade existing pieces for new designs at prevailing gold valuations. This behaviour, accelerated by price volatility, enhances market liquidity without necessarily driving net new demand — but it does sustain transaction volumes and retail engagement.
2.2 ETF and Investment Demand: Structural Upgrade
Chinese gold ETFs are likely to remain a significant growth vector. The record AUM and holdings data as of January 2026 reflect a qualitative shift: institutional investors — including insurance companies, pension-adjacent vehicles, and asset managers — are allocating to gold ETFs as a portfolio diversification tool, not merely a speculative vehicle. As long as domestic bond yields remain compressed and equity markets volatile, the relative attractiveness of gold as a low-correlation return driver will persist.
Risks to ETF demand include a sharp reversal in gold prices (which could trigger momentum-driven outflows, as already observed in early February), or a significant improvement in domestic risk asset returns that reduces the appeal of defensive allocations.
2.3 Jewellery Demand: Structural Pressure with Cyclical Support
The jewellery channel faces a structural challenge: younger Chinese consumers exhibit different purchasing patterns, preferring designed or branded pieces over pure-weight gold, and demonstrating lower overall propensity to hold physical gold. Simultaneously, the high-price environment compresses volume even as it supports value. The industry has responded by emphasising craftsmanship, branding, and lighter-weight designs, but the longer-term trajectory for volume demand remains subdued.
2.4 PBoC and Central Bank Purchasing
There is little indication that the PBoC will pause its reserve diversification programme in the near term. Even at historically elevated gold prices, the strategic rationale — hedging against USD currency risk, geopolitical contingencies, and the desire to increase the gold share of total reserves toward levels comparable with major Western central banks — remains intact. Market consensus expects continued, if potentially moderated, PBoC accumulation through 2026.
2.5 Key Risks to the Outlook
Downside risks to China’s gold demand include:
A sustained USD strengthening cycle, which historically pressures gold prices and reduces import attractiveness;
Resolution of major geopolitical risk events (e.g., US–China trade tensions, Taiwan Strait developments), which could reduce safe-haven premiums;
A domestic Chinese economic recovery that improves consumer confidence and shifts discretionary spending toward experiential consumption over physical assets;
Regulatory changes to gold import quotas or capital controls that could restrict bullion flows.
- Impact on Singapore
Singapore’s position as Southeast Asia’s premier financial hub, a major gold trading and refining centre, and a key node in regional commodity supply chains means that shifts in China’s gold market carry direct and indirect consequences for the city-state across multiple dimensions.
3.1 Singapore as a Regional Gold Hub
Singapore is one of Asia’s leading gold trading centres, hosting significant bullion banking operations, refineries (including the Singapore Precious Metals Exchange, SGPMX), and commodity trading desks of global banks and trading houses. The city-state benefits from a favourable regulatory environment (GST-exempt for investment-grade gold), deep capital markets, and geographic proximity to major demand centres in China, India, and Southeast Asia.
When Chinese gold demand surges — as in January 2026 — Singapore-based trading desks benefit from elevated price volatility and trading volumes. Increased arbitrage opportunities between the LBMA/COMEX benchmarks and the SHAUPM can generate significant revenue for commodity desks operating out of Singapore.
3.2 Impact on Singapore Financial Markets
Channel Mechanism Direction
Bullion trading revenues Higher volatility and volumes increase trading desk P&L Positive
ETF and wealth products Singapore-listed gold ETFs and gold savings products see inflows as regional investors follow China’s lead Positive
SGX commodity derivatives Elevated hedging activity supports derivatives volumes Positive
Refinery throughput Demand for re-refining and assaying may rise with import/export flows Positive
Consumer jewellery retail High gold prices may dampen tourist and resident jewellery demand Mildly Negative
Logistics and vaulting Increased bullion flows support Brink’s, Malca-Amit and similar operators Positive
3.3 Currency and Monetary Policy Spillovers
A sustained gold rally and continued RMB-denominated accumulation by Chinese institutions can have indirect currency implications for Singapore. The SGD is managed against an undisclosed basket of currencies with significant CNH weighting. Shifts in Chinese capital flows — including portfolio reallocation into gold — can influence regional FX dynamics. However, Singapore’s managed float framework provides a buffer, and the direct FX transmission from Chinese gold demand is relatively attenuated.
The Monetary Authority of Singapore (MAS) does not face the same reserve composition pressures as the PBoC. However, MAS’s own reserve management framework includes gold as a component, and sustained gold price appreciation passively increases the SGD value of MAS gold holdings, marginally improving the reserve asset position.
3.4 Trade and Supply Chain Linkages
Singapore serves as an entrepôt for gold flows between the Indian subcontinent, Middle East, Africa, and East Asia. When China’s import appetite is elevated — as in periods of price dips or seasonal demand — Singapore-based trading intermediaries facilitate transshipment and financing of physical gold flows. The suppressed Chinese import volumes in full-year 2025 (down 41% y/y) likely modestly reduced intermediary activity, whereas the January 2026 price rally and any subsequent import recovery would benefit regional logistics players.
3.5 Investment and Wealth Management Implications for Singapore Investors
For Singapore-based institutional and retail investors, the China gold story in 2026 presents both an informational signal and a direct portfolio consideration:
China’s sustained central bank accumulation and record ETF inflows provide a structural demand floor that supports medium-term gold price constructiveness;
Singapore-listed gold products — including SPDR Gold Shares (GLD), and gold accumulation plans offered by DBS, UOB, and OCBC — have benefited from the gold price rally, and may see continued inflows if Chinese demand sustains international price levels;
The high-price environment creates potential profit-taking opportunities for existing gold holders, while also raising the question of whether gold’s valuation has overshot fundamental drivers;
Singapore family offices and private banks have reported increased client interest in gold as a portfolio hedge, particularly as geopolitical uncertainty in the Asia-Pacific region (US–China trade tensions, Taiwan Strait, South China Sea) remains elevated.
3.6 Outlook for Singapore’s Gold Market
The medium-term outlook for Singapore as a gold hub is constructive, contingent on continued Asian demand robustness. Key factors that would reinforce Singapore’s position include: sustained Chinese ETF and institutional demand driving regional price discovery activity; continued central bank diversification flows transiting regional markets; and any regulatory developments that further entrench Singapore’s role in Asian gold settlement and custody.
A sustained pullback in Chinese gold demand — driven by either a major price correction, policy reversal, or macroeconomic improvement that rotates capital out of gold — would represent the primary downside risk to Singapore’s gold market intermediary activity.
- Conclusion
China’s gold market in early 2026 illustrates the convergence of multiple structural and cyclical forces: record-breaking price performance, driven by geopolitical risk premiums, monetary easing expectations, and sustained central bank accumulation; a wholesale and jewellery sector navigating elevated price volatility with caution; and an ETF and institutional investment channel that is rapidly maturing and deepening.
The PBoC’s uninterrupted 15-month purchasing streak at historically high prices signals that gold’s strategic reserve role has been firmly institutionalised in Chinese monetary policy. This demand is structural, not price-sensitive, and provides a durable floor for global gold prices that will persist regardless of short-term market gyrations.
For Singapore, the implications are broadly positive across financial services, trading infrastructure, and wealth management, with the primary risk being a sharp and sustained reversal in gold prices that would reduce transaction volumes and hedge demand. Singapore’s structural advantages as a gold hub — regulatory clarity, market infrastructure, geographic positioning, and financial depth — position it well to continue benefiting from Asia’s secular appetite for gold as both a monetary anchor and an investment asset.
Sources & References
World Gold Council. (2026, February 12). China gold market update: A strong start to 2026. Goldhub.
State Administration of Foreign Exchange (SAFE), People’s Republic of China. Monthly Reserve Data.
Shanghai Gold Exchange (SGE). Monthly Withdrawal Statistics.
Shanghai Futures Exchange (SHFE). Gold Futures Daily Volume Data.
ICE Benchmark Administration. LBMA Gold Price PM Historical Series.