<p>Despite gold's sideways price performance and increased volatility, Chinese gold demand remained generally stable in July.</p>
<p>China ranks as the world’s biggest gold market. </p>
<p>The gold price in yuan was virtually unchanged in July. According to the World Gold Council's gold return attribution model, a weaker dollar and improved investor positioning supported the yellow metal, while rising yields continued to create headwinds.</p>
<p>Chinese gold demand has been bifurcated, with resilient investor buying and a struggling jewelry sector.</p>
<p>Withdrawals from the Shanghai Gold Exchange (SGE) fell by 8 percent in July, dipping to 80 tonnes. Banks, jewelers, and refiners pull gold from the SGE, and the volume provides a snapshot of wholesale gold demand in China.</p>
<p>The World Gold Council described wholesale demand as “tepid,” but noted that the decline was “largely seasonal.”</p>
<blockquote>
<p>“The jewelry sector is typically tepid in Q2 and early Q3.”</p>
</blockquote>
<p>The WGC said data indicates that physical gold investment demand was “broadly unchanged” from June and failed to offset the decline in jewelry demand due to high prices.</p>
<p>Year-on-year, SGE withdrawals are down 15 percent, reflecting a softer jewelry market and a higher gold price. They are also coming off extremely high demand numbers from last year.</p>
<p>ETF flows indicated a modest resurgence in investment demand in July.</p>
<p>Five tonnes of gold flowed into Chinese gold-backed funds last month. That pushed ETF assets under management (AUM) up 3 percent to ¥250 billion ($37 billion).</p>
<p>ETFs are a convenient way for investors to play the gold market, but <a href="https://youtu.be/7aP6VbgXVeM?si=evkq4O9Ibe1FDdF6" target="_blank" rel="noopener">owning ETF shares is not the same as holding physical gold.</a></p>
<p>According to the World Gold Council, investment interest was buoyed by several factors.</p>
<blockquote>
<p>“Recurring geopolitical uncertainty, weaker equities, and persistent gold accumulation by the PBoC. Meanwhile, rising institutional investor participation as the gold price stabilized also supported demand in the month.”</p>
</blockquote>
<p>In another sign of bullish sentiment, net longs on the Shanghai Futures Exchange rose 24 tonnes to 117 tonnes at the end of July.</p>
<p>Meanwhile, <a href="https://www.moneymetals.com/news/2026/07/25/chinese-gold-imports-surged-to-2-year-high-in-june-005094">Chinese gold imports rose to a two-year high</a> in June as lower prices sparked a resurgence in demand.</p>
<p>Looking ahead, World Gold Council analysts said investment demand will likely improve if the price continues to break higher. Wholesale demand could also get a boost from seasonal jewelry inventory replenishment. </p>
<p>However, there are some potential headwinds if the domestic equity rebound that started earlier in August persists.</p>
