According to Futu Securities, on July 30, the World Gold Council released a review and trend analysis report on the Chinese gold market in the second quarter of 2024. It pointed out that due to the soaring gold price and slowing economic growth, China's gold jewelry demand for the second quarter of 2024 hit a new low for the same period since 2009, reaching only 86 tons; gold jewelry consumption in China for the first half of this year decreased by 18% year-on-year to 270 tons. In addition, the demand for gold investment in the Chinese market remains strong. Data shows that in the second quarter, the cumulative inflow of gold ETFs in the Chinese market was approximately 14 billion yuan (+2 billion US dollars, +25 tons), reaching a historical high, pushing the total scale of asset management and total holdings to new highs.

Wang Lixin, CEO of the World Gold Council's China region, said that the significant decline in gold jewelry consumption demand in the second quarter of this year is not unique to China. The main gold jewelry consumption markets in the world, such as India, the Middle East, the Americas, and Europe, have all shown a decreasing trend due to the historical high of gold prices. He said that China's economy has experienced decades of high-speed development and is now facing a key node of further comprehensive deepening of reforms. The gold jewelry industry may also start to enter a new stage of development, namely, the mature market stage.

While the demand for gold jewelry is slowing down, the demand for gold investment in the Chinese market remains strong in the second quarter. Data shows that in the second quarter, the cumulative inflow of gold ETFs in the Chinese market was approximately 14 billion yuan (+2 billion US dollars, +25 tons), reaching a historical high, pushing the total scale of asset management and total holdings to new highs. In the first half of the year, the Chinese market's gold ETFs continued to flow in, with total holdings and total assets under management increasing by 50% and 77% respectively, mainly due to the strong performance of gold prices.

In addition, the demand for gold bars and coins in the second quarter reached 80 tons, a year-on-year increase of 68%, and the strongest second quarter performance since 2013. The continuous rise in gold prices and investors' demand for value preservation drove the total demand for gold bars and coins in the first half of the year to reach 190 tons, a significant increase of 65% compared to the same period last year.

In terms of official reserves, the People's Bank of China (PBoC) announced the purchase of only 2 tons of gold in April, a significant decrease in gold purchases from previous quarters. In the first half of the year, the People's Bank of China announced the purchase of 29 tons of gold. Currently, China's official gold reserves are 2,264 tons, accounting for 9% of the total foreign exchange reserves.

Looking at future demand changes, Wang Lixin said that seasonal factors may support a slight increase in domestic gold jewelry consumption demand in the second half of 2024. "If the gold price does not experience drastic fluctuations for the rest of this year, it may attract more consumers to return." In terms of physical gold investment demand, "We hold a cautious and optimistic attitude towards China's physical gold investment demand in the second half of the year." Wang Lixin further said that considering investors' demand for hedging may further increase. However, if the gold price trend is not clear enough in the second half of the year, the demand for gold bars and coins may come under pressure.