China held a two-day gold conference last week that skated over the big issue in the room—whether the country’s central bank has returned to buying the precious metal after two months on the sidelines due to high prices.
The conference at the weekend did hear that China’s output of gold edged up an unconvincing 0.58% to 179.634 tonnes in the first half of 2024. Lower grades, tougher (and deeper for underground mines) mining conditions, rising water problems, and costs all continue to restrict production. But imports of gold produced offshore by many of the same group of domestic miners continue to boom.
However, the impact of rising prices can be seen in data that showed consumption fell by 5.61% from the same period a year earlier to 523.753 tonnes. Demand for jewellery has faded in China—because of the strong rise in prices, up around 12% so far this year, and a weakening in consumer interest and spending generally across the economy. Investment interest remains solid, but western analysts say that is also due to consumer unease about the health of the Chinese economy.
“Chinese demand for jewellery has taken a hammering,” the China Gold Council said in a quarterly report. The data imply a dramatic 52% plunge in jewellery purchases in the three months to June, according to calculations for western analysts.
China’s central bank, the People’s Bank of China, has not bought gold in April or May after prices surged past US$2,400 an ounce. The last purchase was a modest 60,000 ounces in March.
Purchases of jewellery fell 27% in the June half, the council said. Sales of bars and coins partially offset the drop in jewellery (which commands a premium compared to investment gold products) with a 46% rise from the first half of 2023.
The figures in the report include jewellery, bars, and coins, and industrial consumption but not purchases by the People’s Bank of China.
The breakdown of the 179.634 tonnes was mine production completed at 141.496 tonnes, and recycling at 38.138 tonnes. As well, 72.026 tonnes of gold were imported in the six months to June, up around 10% from the same period of 2023.
Interestingly, the report revealed a breakdown between domestic mine production—67.851 tonnes—and gold imported by Chinese mining companies from mines they owned or had a share in offshore. That was just over 34.4 tonnes, or 19%.
The report did mention central bank buying historically. China increased its gold holdings by 28.93 tonnes in the half, and as of the end of June, China’s gold reserves were 2264.33 tonnes, the Gold Council report said.