The Chinese gold market is experiencing a historic upswing: In the first quarter of 2026, investors fled to gold-backed ETFs at a record pace, while the central bank continually increases its holdings.
• Chinese gold ETFs see strongest inflows in their history
• People’s Bank of China expanded its gold reserves for the 17th consecutive month in March
• Gold withdrawals at the Shanghai Gold Exchange at 134 tons
The Chinese gold ETF market developed historic momentum in the first quarter of 2026. According to the latest market report from the World Gold Council (WGC), the price rally of the precious metal as well as the volatility of other domestic asset classes drove this development. As a result, Chinese gold ETF holdings hit a new record high. Both private and institutional players increasingly used the precious metal to secure their portfolios.
Continuous purchases by the Chinese central bank
The People’s Bank of China (PBOC) continues to pursue its long-term accumulation strategy. In March, the central bank expanded its gold reserves again, continuing the series of monthly purchases without interruption. The World Gold Council specifies in its report: “The PBOC reported an additional gold purchase of 5 tons in March, bringing China’s total gold reserves to 2,313 tons.” These government purchases support wholesale market sentiment and underscore gold’s role as a strategic reserve currency within the national financial architecture.
Recovery in physical wholesale
In parallel with the ETF segment, the physical market also recovered in March. After the regular decline in demand following the Chinese New Year, wholesale trade recorded increasing volumes again. An indicator of this is the gold withdrawals on the Shanghai Gold Exchange (SGE), which is considered a reference value for physical demand in the country. The WGC market update states: “Gold withdrawals from the Shanghai Gold Exchange totaled 134 tonnes in March, representing a seasonal increase from February.” Despite the high price level, demand for investment gold remained robust.
Price discrepancy highlights Chinese hunger for gold
A clear indication of the exceptional demand situation in the Middle Kingdom is the significant price premium on the Shanghai Gold Exchange (SGE) compared to the global market. The SGE premiums rose significantly in March/April 2026 and at times reached double-digit dollar values per troy ounce above the London reference price. This decoupling shows that Chinese investors are willing to pay a significant premium to protect themselves in a market environment with limited physical supply. While the global gold price is primarily influenced by macroeconomic data from the USA, local demand pressure in China is creating its own price dynamics, which is increasingly making the country the pacesetter for the entire asset class.
Market dynamics through Asian capital flows
The combination of record inflows in the ETF sector, ongoing central bank purchases and stable physical demand are cementing China’s influence over global price discovery. The World Gold Council analyzes the current market situation as follows: “The combination of a weaker local currency and lackluster performance of other domestic assets has driven investor interest in gold to unprecedented levels.” In this environment, gold ETFs act as a primary vehicle for Chinese investors to gain liquid exposure to the gold market while uncertainty remains in other sectors.
Gold price with consolidation in the tension area of geopolitics
Most recently, a troy ounce of gold cost 4,708.53 US dollars (as of April 25, 2026). While this corresponds to an impressive performance of around 40 percent over the year, the price also illustrates the recent slowdown: In the past three months, the precious metal suffered noticeable setbacks after it had already traded significantly higher at its peak.
This volatility is closely linked to the escalation in the Iran conflict. While the price reached extreme record levels in the first half of 2025, the current standoff in the Middle East is leading to profit-taking. Investors are currently pricing in the scenario of a protracted war of attrition, which will melt the initial “panic premium”. Nevertheless, it is precisely the Chinese hunger for gold that is preventing a deeper fall: for investors in the Far East, gold remains the ultimate safe haven in view of the global supply chains disrupted by the war and the resulting inflation risks, which keeps the price stable above the $4,700 mark despite the quarterly setback.
Claudia Stephan, editorial team at finanzen.net
Image sources: Bule Sky Studio / Shutterstock.com, Africa Studio / Shutterstock.com
