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LAWRIE WILLIAMS: China gold demand heading for plus 1,700 tonnes in FY2021

08 Dec 2021

While still well below its peak year of 2015, China’s gold demand, as measured by Shanghai Gold Exchange (SGE) withdrawals for the whole of 2021, will be coming in comfortably above the 2019 and 2020 totals.  The November gold withdrawal figure, which has just been announced was 158.31 tonnes, which exceeded that for the same month in 2019 and 2020, although still a few tonnes lower than in 2017 and 2018 – the last time SGE annual withdrawals exceeded 2,000 tonnes.

The year to date cumulative gold withdrawals figure is a little over 1,550 tonnes, already higher than the annual total for the two preceding years.  December tends to be a strong month for SGE withdrawals, ahead of likely increased demand for the Chinese (lunar) New Year celebrations, so we would anticipate full year SGE gold withdrawals as exceeding 1,710 tonnes if December SGE withdrawals come in at around the same volume as in 2019 and 2020.

The higher figure for the current year is indicative of at least partial recovery by the world’s most populous nation from the impact of the Covid-19 virus pandemic, which probably started there.  Chinese daily virus infection figures and mortality numbers are considered to have been heavily understated, but if the nation is following the trajectory seen elsewhere, there is little doubt that there will have been a substantial recovery from the earlier presumed high infection levels.  The rise in SGE gold withdrawals throughout the current year would appear to support this opinion, suggesting individual incomes are beginning to get back to pre-pandemic levels.

With gold imports into the world’s second largest gold consuming nation, India, also reportedly running at a much higher level this year, the impact of higher levels of demand from the world’s two highest consuming nations is at least encouraging for the gold investor.

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 month by month by SGE for first ten months of the year.

 It is also noticeable that SGE gold withdrawals in the first half of the current year were still quite a few tonnes lower than in 2019 – the last pre-Covid year – although second half figures were significantly higher.  This could suggest that initial Covid infections were already beginning to appear in China earlier than previously admitted, or perhaps that we should anticipate 2022 SGE first half withdrawals to pick up to 2019 levels which could mean the 2022 annual total gets back nearer to 2,000 tonnes.  That would be good news for gold investors who might need a boost after the precious metal’s recent disappointing price performance.

We have always equated SGE gold withdrawal levels with total Chinese gold demand, although this is a contentious view disputed by some others.  However we understand that China’s own gold yearbook supports our view and that other measures of Chinese consumption may ignore demand from banks and financial institutions which we feel should be an integral part of the whole Chinese gold demand picture.

08 Dec 2021 | Categories: Gold, China, India

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