Decline in gold prices in China increases physical demand and trading volume

The volume of the Au99.99 contract traded on the Shanghai Gold Exchange rose to 43 million lots last week, reaching its highest level since April. Chinese consumers increased their purchases, seizing the price drop as an opportunity in their search for a safe haven due to the slump in the real estate market and low bond yields.

Trading volume in Au99.99, one of the popular contracts on the Shanghai Gold Exchange, reached 43 million lots, equivalent to approximately 430 tonnes. The contract, which requires full payment and mandatory delivery, reflects physical demand rather than leveraged speculation. Zijie Wu, an analyst at Jinrui Futures Co., noted that domestic gold demand grew stronger as prices fell, contrary to the price trend, and that Golden Week holiday purchases in October along with low prices provided attractive entry points for long-term investors.

Chinese consumers purchased the majority of the gold through savings plans with low participation thresholds. According to sources, purchases under these programs in the first nine months exceeded the total for the year 2025. The real estate slump, record low yields on government bonds, and a $2.4 trillion loss in stock market value triggered gold demand. Gross central bank figures in the Shanghai Gold Exchange's April report revealed that lending institutions sold 2,187 tonnes of gold to consumers in 2025.