China’s gold consumption in the first half of 2024 fell by 5.61% compared to the same period last year, according to data from the Gold Association. The country, which is the world’s largest gold consumer, used 523.75 metric tons of gold from January to June.
The demand for gold jewellery, which accounts for 51.6% of total consumption, saw a significant decline of 26.68%, dropping to 270.02 tons. The Gold Association attributed this decrease to high gold prices, which have raised operational risks for gold processing and sales enterprises. Consequently, purchases from wholesale and retail sectors have declined, leading to a notable reduction in jewellery processing volumes.
On April 15, the most-traded gold futures contract on the Shanghai Futures Exchange reached a record high of 588.28 yuan ($81.11) per gram, marking a 21.7% increase. Overall, the contract experienced a 14.1% rise in the first half of the year.
High prices also impacted the central bank’s appetite for gold, as China refrained from gold purchases for the second consecutive month in June, maintaining a total gold reserve of 2,264.33 tons.
In contrast, purchases of gold bars and coins surged by 46.02%, reaching 213.64 tons, which constitutes 40.8% of total consumption. This increase reflects a growing preference for safe-haven assets among investors amid ongoing geopolitical tensions and a sluggish global economic recovery.
China’s gold output from domestically sourced raw materials rose by 0.58% year-on-year to 179.63 tons in the first half. However, this increase fell short of expectations due to diminishing easily mined resources in older mines and challenges in the construction of new mines. Furthermore, some miners reduced or halted production in response to stricter environmental and safety regulations.
The output from imported raw materials increased by 10.14% to 72.03 tons, bringing the total gold output in China for the first half of 2024 to 251.66 tons, which is a 3.14% increase year-on-year.