2021 Chinese Gold Demand Surged Above Pre-Pandemic Levels

Chinese gold consumption rebounded in 2021, rising by 36.53% year on year as the market continues to recover after taking a hard hit during the coronavirus pandemic.

More significantly, gold demand was up 11.78% compared with consumption in 2019, before the pandemic.

China ranks as the world’s number one gold consumer.

Chinese gold demand came in at 1,120.9 tons, according to data released by the China Gold Association.

In 2021, under the remarkable results of China’s overall economic development and epidemic prevention and control, domestic gold consumption generally maintained a recovery trend and achieved rapid growth compared with the same period (in 2020).”

A rebound in gold jewelry sales helped drive overall demand higher. Gold jewelry sales were up 44.99% to 711.29 tons last year.

The was also a sharp increase in demand for physical investment gold in China. Gold bar and gold coin sales were up 26.87% to 312.86 tons.

Chinese investors put money into gold ETFs as well. According to World Gold Council data, Chinese gold-backed funds hit record holdings of 75.3 tons worth $4.4 billion at the end of 2021. On the year, China’s gold ETFs recorded net inflows of 14.4 tons.

ETFs are backed by physical gold held by the issuer and are traded on the market like stocks. They allow investors to play gold without having to buy full ounces of gold at the spot price.

Meanwhile, on the supply side, the world’s biggest gold producer reported a drop in mine output. Gold production at Chinese mines declined by 9.95% year-on-year to 328.98 tons.

According to the World Gold Council, inflation concerns, low opportunity cost and seasonal demand could support further growth in gold demand moving forward.

According to the Global Times, the Chinese government implemented macroeconomic policies aimed at bolstering domestic gold consumption.

Last spring, China gave the green light for the import of 150 tons of gold. The report notes that China’s returning appetite for gold could potentially “support global prices.” Reuters called the size of the expected Chinese gold imports a “dramatic return to the global bullion market.”