China's Bar and Coin Investment Crushes Gold Jewelry Demand
Friday, 7/25/2025 13:05
Retail gold investing twice the size of jewelry in Q2...
GOLD DEMAND in No.1 consumer China favored coins and small bars for investment almost twice as much as jewelry in spring 2025, marking the sharpest switch on modern records from adornment to investing as the price of the precious metal runs to fresh all-time highs.
"High gold prices have suppressed gold jewelry consumption," says government-mandated trade body the China Gold Association, reporting its latest data this week.
"The investment demand for gold bars and gold coins has increased significantly."
Across the first half of 2025, gold jewelry demand in the world's 2nd largest economy fell 26.0% by weight from the same period last year, totalling less than 200 tonnes on the CGA data and extending the weakness seen during a
disastrous Chinese New Year for jewelry sales.
Gold coin and retail bar demand, in contrast, rose 23.7% to 264 tonnes.
This means that April-to-June − when economic fears over US President
Trump's trade tariffs sent gold to record prices at $3500 per ounce in London and ¥830 per gram in Shanghai − saw Chinese households buy 126 tonnes of bullion coin and bars but only 65 tonnes of gold as jewelry.
"Jewelry products with light weight, strong design and high added value are still popular, and such products give retailers better profit margins," says the China Securities Journal, commenting on the CGA figures.
"The demand for gold bars in gold shops is still strong" so far this summer, it adds, "but the profit is lower" for both manufacturers and retail outlets.
Market-leader Chow Tai Fook (HK: 1929) this week reported unaudited figures showing same-store sales down 3.3% by value in April-to-June across mainland China compared to the same period in 2024, while volume dropped by 11.1%.
That marked "a sequential improvement trend compared to previous quarters," said CTF, after January-to-March − which included the key Chinese New Year gift-giving holidays − had seen its same-store sales in China plunge 13.2% by value and 25.2% by volume.
"Jewelry demand has weakened amid the surging gold price, cautious consumer spending, and the industry's continued consolidation," says China research head Ray Jia at the global mining industry's World Gold Council
But the jewelry sector's weakness "was partially offset by investment strength," he adds, encouraged by the surging gold price, "rising safe-haven demand amid US-China trade tensions, and tepid performances of other domestic assets."
"[That] supported bar and coin sales" while also boosting speculative trading in Shanghai gold futures contracts.
"China's wholesale gold demand slowed further in June,"
says Jia at WGC in his H1 review, pointing to lower withdrawals of metal from vaults approved to hold metal for settlement on the Shanghai Gold Exchange.
The only legal route for bullion to enter private circulation in China, the SGE saw physical withdrawals in the first half of 2025 total 678 tonnes, down by 1/5th both from January-to-June 2024 and versus the past decade's first-half average.
Trading in Chinese gold derivatives, in contrast, set a new record by notional weight up at the equivalent of 534 tonnes per day, while
record-heavy inflows to China-listed gold-backed ETF trust funds took the sector's total holdings up to 200 tonnes.
"Seasonal weakness, still tepid consumer confidence, and the elevated gold price continued to pressure gold jewellery consumption" last month, Jia adds, "leading to a cautious stance from retailers on restocking.
"Added to this was June's cooling momentum in bar and coin investment as investors sat on the sidelines amid the range-bound gold price movement."
While China's domestic gold coin and bar purchases have never exceeded jewelry consumption as dramatically as they did in Q2 2025, data from the CGA first signalled
Chinese retail investment overtaking adornment demand in the second quarter of last year.
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