A new wave of speculation has hit the gold market, sparking curiosity about future price trends. Recent fluctuations and international developments have significantly impacted the market.
China, a major player in gold purchases, experienced a slowdown in June 2025. However, the country achieved record gold investments in the first six months of the year. The World Gold Council recently highlighted this development, revealing that China's largest investments were in ETFs. In the first half of 2025, China invested Rs 64,000 crore (US$8.8 billion) in gold ETFs, marking a historic record for half-year investments.
In contrast, wholesale demand for gold jewellery dropped by 10 percent in June due to soaring gold prices, discouraging consumers from making new purchases.
In June, 90 tonnes of gold were sold, marking a significant withdrawal from the Shanghai Gold Exchange (SGE). This figure is notably below the 10-year average, with total withdrawals in the first half of the year reaching 678 tonnes, an 18% decline from the previous year. Gold prices surged by 23% in US dollars and 21% in Chinese yuan (RMB) during the first half, the fastest growth rate since 2016.
China's central bank People's Bank of China purchased gold for the eighth consecutive month, adding 19 tonnes in the first half of the year. China's gold reserves now stand at 2,299 tonnes. Although gold futures trading slowed slightly in June, the average daily volume in the first half of the year was 534 tonnes, the highest on record.
China imported 89 tonnes of gold in May 2025, a 21 percent decrease from April and a 31 percent drop from May last year. This decline is primarily due to reduced demand for jewellery.
Gold in China has transitioned from a mere jewellery item to a strategic investment vehicle. As consumer interest in jewellery wanes, record investments are being made in alternatives such as ETFs, bars, and coins. Central bank purchases continue to bolster gold's status as a strong investment option.
The surge in gold purchases by Chinese investors is boosting global demand, directly influencing gold prices in India. This could lead to higher gold prices domestically, potentially reducing gold sales during weddings and festivals and impacting jewellers and small traders.
According to the World Gold Council, a rising US dollar and Treasury yields are expected to negatively impact gold prices. In the medium term, gold prices may decline due to central bank purchases and reduced retail investment demand.
