The Shanghai Gold Exchange reported that May gold withdrawals plummeted to 63.5 tonnes, a level not seen since February 2020. This data confirms a cooling trend that extends beyond exchange-traded funds to the equities market, where Hong Kong-listed gold producers suffered a broad-based selloff. China National Gold International Resources and Jihai Gold led the decline with a 3.6% drop, while Zijin Mining and Shandong Gold saw losses nearing 3%.
China’s Gold Market Hits a Wall as Investor Sentiment Shifts
RMB 10 billion vanished from Chinese gold ETFs in just one month, signaling a sharp reversal in the market frenzy that fueled global prices earlier this year. As investors abandon the buy-the-dip strategy, the cooling demand represents the most significant retreat in domestic appetite since the initial 2020 pandemic lockdowns.
This volatility suggests a fracturing of the consensus that previously treated every price dip as a buying opportunity. Despite the current exodus from ETFs and the contraction in physical demand, analysts remain divided on the long-term outlook. While the immediate market environment reflects heightened uncertainty, industry insiders maintain that the strategic appeal of gold as a long-term asset has not yet evaporated.
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