China's gold imports surge to two-year high

China imported over 170 tons of gold in june, making the precious metal attractive to the world's top consumer market as prices fell.

Chinese Customs data released last week showed the nation's gold imports increased for the third consecutive month. In june, China purchased 173 tons of gold, the highest volume since march 2024. This figure brings China's total gold imports for the first half of the year to 820 tons, nearly double the amount imported during the same period last year, according to Business Today.

The combination of cheaper gold and a strengthening yuan fueled increased investment demand. Gold has faced pressure since the outbreak of the Middle East conflict in late february. Rising oil prices contributed to higher inflation, sparking concerns that global central banks would raise interest rates. Higher interest rates typically make precious metals less attractive, as they do not offer fixed returns. Since early march, global spot gold prices have fallen by over 20%.

Additionally, Chinese banks capitalized on this opportunity to build up their stockpiles to meet retail demand. The People's Bank of China (PBOC) grants banks quotas for gold imports, a process that is tightly regulated. Last month's import levels were likely further boosted by a new licensing mechanism, effective from 1/6, which encouraged banks to fully utilize their existing quotas.

China's gold imports have now risen for three consecutive months. In april and may, the figures were 157 tons and 163 tons, respectively.

Ray Jia, head of China market research at the World Gold Council (WGC), stated, "The persistent spread between China's domestic gold price and the international price continues to be a significant factor driving import activity". Jia anticipates the "jewelry sector will remain stable as the industry replenishes inventory following a period of weaker purchasing demand". China stands as one of the world's largest gold consumer markets.

Also in june, the PBOC reported its gold reserves increased by nearly 15 tons, marking the largest rise in 2,5 years. The PBOC has been buying gold for 20 consecutive months, raising the country's total gold reserves to 75,44 million ounces. Despite this accumulation, falling gold prices caused the value of these reserves to decrease to USD 303,7 billion by the end of last month, down from USD 340,7 billion in may.