China's Open Appetite for Gold: How Beijing Leads the Global Market

China's gold imports via Hong Kong jumped by 127% in July, reaching approximately 43.9 tons compared to 19.3 tons in June, according to data from the Hong Kong Census and Statistics Department. Although these figures do not represent China's total imports—as a significant portion is imported through Shanghai and Beijing—they reflect the growing appetite of the Chinese market for gold at a time when investors are anticipating trends in US monetary policy and global economic developments.

Indicators of Domestic Demand

The strong increase in imports coincides with continued purchases by the Central Bank of China, which boosted its reserves for the ninth consecutive month in July. This behavior reflects Beijing's desire to diversify its assets away from the dollar and simultaneously supports the local jewelry industry as it prepares for the wedding and holiday season, where gold remains a firmly established part of Chinese consumer culture.

Global Reflection

UBS analysts point out that gold trading on the Shanghai Gold Exchange at a premium to its London price for most of July reflects the strength of domestic demand, which helped attract flows towards Asia. This trend, according to experts, provides support for the global market, which saw a 3% year-on-year increase in total demand in the second quarter of 2025, reaching 1,248.8 tons, driven by a 78% increase in investments, according to the World Gold Council.

What Does This Mean for the Markets?

Price Support: Continued strong Chinese demand creates a solid floor for gold prices above the $3,300 per ounce level, even with fluctuations in the dollar and US yields.

Role of Central Banks: The People's Bank of China's purchases confirm the role of central banks as one of the most important drivers of strategic demand for gold.

Signals for Investors: The rise in imports indicates that China sees gold as a long-term hedging tool against geopolitical risks and currency fluctuations.

The significant rise in China's gold imports through Hong Kong in July is not just a transient commercial event, but a clear signal that Asian demand is once again leading the global market. While the short-term path remains dependent on the Federal Reserve and the dollar, the strength of Chinese demand could be a stabilizing and supporting factor for the precious metal's prices during the second half of 2025.