World Gold Council: March Decline Limits Quarterly Gold Gains Despite Surge in Investment and Chinese Gold ETFs

Gold ended the first quarter with a weak performance in March as both the LBMA Gold Price PM in USD and the Shanghai Gold Benchmark Price (SHAUPM) in RMB declined, paring back first-quarter gains, according to the World Gold Council.

 Ray Jia, Research Lead (APAC, ex-India) and Vice Chair of Business Relations (China) at the World Gold Council, stated that the recovery in gold prices at the end of March extended into April as global investors returned to adding gold to their portfolios. 

He added that wholesale gold demand in March saw a seasonal rebound of 57% month-on-month to 134 tonnes, pushing the Q1 total up by 3% year-on-year to 345 tonnes, as strong investment demand offset weakness in the jewellery sector.

 China's gold ETFs continued to expand during the month, ending the first quarter with record inflows of 59 billion RMB ($8.5 billion), while assets under management jumped 26% to 304 billion RMB ($44 billion), and holdings increased by 50 tonnes to 298 tonnes. 

The People's Bank of China announced its seventeenth consecutive month of gold purchases in March, adding 5 tonnes to bring its total reserves to 2,313 tonnes, representing 9% of total foreign reserves. Official Chinese gold holdings rose by 7 tonnes during the first quarter. 

Regarding the outlook, he noted that while the second quarter is traditionally a low season for jewellery consumption, price stability could provide a potential boost.

 Investment demand may also find support from falling bond yields and a lack of local investment alternatives, though the trajectory of gold prices will remain the decisive factor for investors. 

More detailed Q2 forecasts and a Q1 review will be included in the Gold Demand Trends report scheduled for release on April 29.

The weak March limited Q1 gains as gold experienced a sharp decline, with the LBMA Gold Price PM in USD dropping 12% during the month, affected by receding expectations for U.S. interest rate cuts due to inflation concerns linked to Middle East conflicts, alongside momentum factors as investors liquidated positions in futures, ETFs, and options. 

The SHAUPM recorded a similar 11% decline, although the local currency's depreciation limited the extent of the drop. Consequently, both the global USD price and the Chinese benchmark price ended the first quarter with a 7% increase despite the March volatility.

 In the wholesale market, banks, retailers, and refiners withdrew 134 tonnes of gold from the Shanghai Gold Exchange in March, a 57% monthly and 12% annual increase.

 This monthly recovery was driven by seasonal factors, including more working days in March compared to February and restocking after the Chinese New Year, while lower prices encouraged opportunistic buying. Total wholesale demand in Q1 reached 345 tonnes, up 3% annually, though it remains 23% below the ten-year average.

 China’s gold ETFs saw inflows for the seventh consecutive month, attracting 12 billion RMB ($1.7 billion) in March, equivalent to an 8.4-tonne increase in holdings. Lower local prices did not dampen investor appetite amid a 6% drop in the CSI300 index and safe-haven demand due to geopolitical tensions involving the U.S., Israel, and Iran. 

During the first quarter, Chinese investors purchased 59 billion RMB ($8.5 billion, or 50 tonnes) of gold ETFs, marking the strongest quarter in history. 

Conversely, daily average gold futures trading volumes in China fell 12% month-on-month to 443 tonnes in March due to lower price volatility.

 The People's Bank of China continued its purchases for the seventeenth month, adding 5 tonnes—the largest increase since February 2025—bringing its Q1 total to 7 tonnes.

 Finally, Chinese customs data showed a rise in gold imports at the start of 2026, with net imports reaching 77 tonnes in January and 96 tonnes in February, supported by strong demand and high local price premiums.