China’s gold market cools amid ETF outflows

China’s gold market cooled in May as weaker prices, robust equity markets and soft jewelry demand weighed on investment activity. Chinese gold exchange-traded funds (ETFs) recorded their first monthly outflows since August 2025, while wholesale demand slumped to its weakest May level in more than a decade. Outflows from Chinese gold ETFs continued during the first week of June. The Shanghai Gold Benchmark Price PM fell 2.7% in May, while the LBMA Gold Price PM declined 1.4% as a strengthening renminbi amplified the drop in local gold prices. Heightened geopolitical tensions in the Middle East and concerns over inflation pushed bond yields and the U.S. dollar higher, contributing to gold’s weakness during the month, the WGC said. Chinese gold ETFs saw net outflows of RMB8.2 billion (US$1.2 billion) in May, ending an eight-month streak of inflows. Total assets under management fell 5% to RMB289 billion, while collective holdings declined by 8.3 tonnes to 293 tonnes by May 31.

Investor interest shifted toward domestic equities as China’s stock market maintained its momentum. Trading activity in gold futures remained relatively stable. Daily average volumes on the Shanghai Futures Exchange totalled 301 tonnes in May, little changed from 307 tonnes per day in April. Trading was constrained by gold’s consolidating price pattern and strong interest in local equities.Physical demand weakened considerably. Gold withdrawals from the Shanghai Gold Exchange, a widely watched proxy for wholesale demand, totalled 64 tonnes in May, down 38% from April. On an annual basis, withdrawals fell 36%, making last month the weakest May since 2010.

While seasonal factors played a part in the decline, lower investment demand and persistent weakness in jewelry consumption also impacted withdrawals. High gold prices have strained affordability for consumers, while additional tax burdens have kept jewellers cautious about replenishing inventories despite some stabilization in prices.