On Monday, February 10th, the spot gold price climbed to a record level of $2,911.30 per ounce, marking the seventh record high of 2025. Amid China’s ongoing economic downturn, Chinese buyers may find the high price of gold out of reach.
So far this year, gold prices have risen by nearly 11%, compared to a 27% increase in 2024. Analysts believe that it’s only a matter of time before gold prices break the $3,000 per ounce mark.
According to Bloomberg, in the past year, Chinese demand has been one of the main factors driving the increase in gold prices. However, the record prices, China’s weakened economy, and the additional costs brought by a strong dollar have made gold prices unaffordable for many Chinese consumers.
Following Trump’s inauguration, international gold prices surged as investors sought safe-haven metals. The US-China trade war has led to a stronger dollar, making gold even more expensive for China.
With ongoing volatility in the Chinese stock market and a crisis in the real estate industry, the demand for gold bars and coins among Chinese consumers has remained strong. However, with the economic slowdown, the demand for jewelry sales, which holds a larger market share, has decreased.
“There is an affordability issue,” said Philip Klapwijk, Managing Director of the consulting firm Precious Metals Insights Ltd., to Bloomberg. “In addition, there is a general economic downturn where consumers are unable to spend as freely as before.”
Klapwijk noted that the usual demand growth before the Chinese New Year gift-giving season has been weaker than usual, providing some relief to the booming gold market.
“Domestic buyers may prefer the simplicity and relative transparency of gold,” Nicholas Frappell, Global General Manager of Sydney’s ABC Refinery, told Bloomberg. “But considering household budget limitations, I do not expect any spectacular performance.”
On February 5, the price of gold jewelry rose to 872 yuan per gram, hitting a historical high on the eighth day of the Chinese lunar new year. A post by the financial Weibo account “China Economic Coordinates” about the 11-yuan-per-gram overnight gold jewelry price increase attracted nearly 500 comments. One netizen commented, “When I got married last year, 628 yuan seemed expensive, but later I bought it for over 660. The continuous rise is really scary.” Another joked, “No wonder in TV dramas, the son gets married, and the mother takes out her gold jewelry saying it’s a family heirloom from her mother-in-law, when in reality, buying it now is too expensive!”
Why are Chinese people so interested in gold? David Hammond, a senior mineral economist from Colorado, believes that the downturn in the Chinese economy has intensified people’s chase for gold. “When a country’s people lack confidence in the economy, especially when they fear the collapse of banks, they often invest in real estate and gold. Now that China’s real estate market is facing collapse, it is not surprising that everyone is rushing to buy gold,” he said to Voice of America.
As a major importer, Chinese gold buyers often have to pay high prices for gold bars. However, the so-called Shanghai premium has actually turned into a discount for most of the past six months. This phenomenon indicates that as gold prices soar, the demand for physical gold among Chinese consumers is weakening.