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LAWRIE WILLIAMS: Big demand boost for China gold in June

08 Jul 2021

Chinese gold demand is really picking up nicely this year as measured by monthly withdrawals from the Shanghai Gold Exchange (SGE).  While month by month withdrawal totals for the first five months of the year have all been higher than for the equivalent months in the pandemic hit 2020, they had been slipping compared with the pre-COVID 2019 monthly totals.  But in June, for the first time this year, the monthly figure was higher than in June 2019 – and comfortably so (see table below).  The cumulative half-year figure is thus still over 12% below that for H1 2019, but there has to be a strong possibility that any full year shortfall will be made up – or almost certainly lessened – in H2.

Table: China SGE Monthly Gold Withdrawals 2019-2021 (Tonnes)





% change 2020-2021

% change 2019-2021





























































Full year






 Source:  Shanghai Gold Exchange, Sharps Pixley.

*Months incorporating Golden Week holidays when SGE closed for a week

** Cumulative totals as reported by SGE for first six months of the year

While it is still a little too early to suggest that this trend will continue, the portents are positive barring some totally unexpected change in the nation’s economic circumstances.  H2 2019 was a weak period for SGE gold withdrawals – indeed month-by-month figures for 2020 from August to the year-end were actually better last year than in 2019 as China began its recovery from the COVID-19 pandemic.  If this year’s monthly SGE gold withdrawal figures remain in excess of last year’s, then the prospect for the full year’s figure at least matching the 1,642 tonnes recorded in 2019 remain strong, although still likely to fall far short of the 2,000 tonne plus annual figures of the several preceding years.

Thus the SGE withdrawal figures are trending higher which means that Asian demand should remain strong this year, even if not back to the 2014-17 levels.  Indian demand seems to have picked up nicely in Q1, although it looks like there may have been a bit of a hiatus in April as the pandemic spread but given that gold price premiums have now re-appeared, as a reduction in COVID restrictions appears to have given demand a boost, this suggests that consumption there will have remained good into the half year and beyond.

Recently, the Thai central bank announced that it had bought 90 tonnes of gold in April and May, confirming that other Asian interest in gold remains at a high level – not just in China and India – the world’s top two gold consumers.  China, of course, remains the world’s No. 1 gold producer, and the destination for its domestically-sourced gold, from its mines and as a by-product of its big base metals smelting and refining sector, is not always transparent in terms of what may be going into the general market place, or perhaps into its central bank gold reserve stock, given that it does not export any domestically produced gold.  It has a track record of only reporting additions to its official gold reserves when it finds it convenient to do so, which is why many believe it holds far more gold than the 1,948 tonnes it currently reports to the IMF.

08 Jul 2021 | Categories: Gold, China, India