Jewellery is out, gold bars are in

SHOPPERS crowd jewellery counters during major holidays in China, yet a noticeable shift is unfolding across retail outlets nationwide: sparkling gold ornaments are losing ground to plain gold bars and coins.

For ordinary households, gold is evolving from a festive gift or fashion statement into a favoured store of household wealth.

For Fu Hao, a 35-year-old marketing manager in Beijing, the calculation has entirely changed.

While he once purchased intricately designed gold bracelets for family milestones, he now opts for unadorned bullion.

“The premiums you pay for jewellery craftsmanship just aren’t worth it anymore,” Fu says shortly after purchasing a 50g investment bar at a local bank.

“We want our purchases to hold their pure value. It may not be wearable, but a plain gold bar provides real peace of mind.”

This retail trend mirrors a far-reaching strategic shift, according to a recent report by S&P Global.

Far from a short-term rush, China’s growing engagement with gold spans household asset allocation, domestic mining expansion, central bank reserve building, cross-border financial infrastructure, and outbound resource investment – all unfolding against a broader wave of gold accumulation across emerging economies.

Chinese buyers are re-prioritising gold bars and coins over decorative jewellery, with many families now viewing physical gold as an alternative safe-haven asset, according to the industry data released by the China Gold Association (CGA).

This structural divergence is becoming increasingly pronounced. According to the CGA, China’s gold consumption reached 511.41 tonnes in the first half of 2026 (1H26), up 1.23% year-on-year (y-o-y).

However, demand for gold jewellery plummeted 33.88% to 132.13 tonnes, while robust investment demand pushed the consumption of gold bars and coins to 339.34 tonnes, surging 28.42%.

Periodic price pullbacks have consistently stimulated sales of gold bars through domestic banking channels, cementing them as a popular hedge against market risks.

“This demand cannot be suppressed, even with gold prices at historical highs,” says Zhao Xiangbin, chief strategist at Beijing Gold and Forex Fortune Investment Management.

“Investor anxieties about geopolitical situations and tariff wars have intensified, leading to a gold market rush to balance asset portfolios and hedge against risks,” he says.

This consumer phenomenon is not unique to China. S&P Global data point to similar patterns across emerging markets: retail investors are cutting spending on ornamental gold while lifting investment- grade gold purchases when geopolitical and domestic economic risks rise.

Even with changing buying patterns, China retains its title as the world’s largest gold consumer, with total household gold demand dwarfing that of the US and European markets combined.

Gold’s status in Chinese policy documents has undergone a meaningful upgrade.

Under mounting global geopolitical and trade uncertainties, Chinese authorities have redefined gold not merely as a commodity or financial asset, but as a “strategic mineral” underpinning national financial and industrial security.

Released last year by nine central government departments, including the National Development and Reform Commission and the Industry and Information Technology Ministry, the Gold Industry High-Quality Development Action Plan 2025-2027 marks this policy turning point.

According to the S&P Global analysis, China’s gold-related policies serve long-term objectives: bolstering domestic economic resilience and expanding the global usage of the yuan.

Progress will likely unfold gradually, underpinned by consistent policy commitment rather than short-term, opportunistic moves, it says.

According to the CGA, China added 40.12 tonnes of gold in the 1H26, lifting its official reserves to 2,346.45 tonnes – the fifth-largest stockpile globally.

Despite this scale, S&P Global notes that gold represents just 6.7% of China’s total official reserves, trailing significantly behind median allocations in developed markets (16.6%) and African nations (17.5%).

This gap creates underlying sentiment for further gold accumulation, either through central bank spot purchases or expanded domestic and overseas mine output, it says.

According to the People’s Bank of China, China’s gold reserves grew by over 40 tonnes in the 1H26 – more than double the 19 tonnes in the 1H25.

The buying spree coincided with fresh regional conflicts and sharp swings in international gold prices.

It also aligns with a worldwide trend: emerging-market central banks across Africa, Latin America and Asia have ramped up gold reserves since 2022, while developed-market physical stockpiles have stayed largely flat.

According to Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, higher gold reserves can strengthen confidence in the yuan as a sovereign currency and support its gradual internationalisation.

The necessity of increasing gold holdings is rising from the perspective of optimising the country’s international reserve structure, Wang adds.

Despite China’s total official reserve assets sitting at roughly US$4 trillion, its gold reserves remain relatively low in both absolute terms and as a share of total assets compared to major global economies, says Zhao Qingming, a specialist in international finance.

Pointing to the growing momentum of global de-dollarisation, Zhao believes that with US dollar assets facing certain risks, moderately trimming dollar holdings in favour of gold is a logical safe-haven strategy.

While international gold prices have surged in recent years, global mine output has remained largely stagnant.

Average lead time for new gold projects from discovery to commercial production has stretched to 17.5 years for 2020 to 2025 projects, nearly doubling from the 10.6-year average seen in 2000 to 2009, according to S&P Global.

Rising capital expenditure, falling ore grades and strict permitting processes discourage aggressive expansion among Western mining majors, it says.

Chinese gold producers are charting a different course. Major domestic miners balance commercial returns with national resource-security priorities.

According to the CGA, state-owned giants including China National Gold Group and Shandong Gold Group reported steady production growth abroad during the 1H26. Overseas mine production by these large groups reached 48.1 tonnes, a robust 21.43% y-o-y increase, it says.

According to S&P Global, China’s domestic gold mine output edged up merely 1% to 381 tonnes last year, yet overseas production from top Chinese gold firms jumped 25% to 90 tonnes meanwhile.

Leading players including Zijin Mining and Shandong Gold have scaled up cross-border mergers and acquisitions since 2022, closing multi-billion-dollar deals across Latin America, Central Asia, Africa and Oceania, it says.

Improved project-execution capacity, solid balance sheets and ample financing allow these companies to press ahead with global expansion without materially weakening their credit profiles.

More Chinese miners are expected to climb into the ranks of the world’s top gold producers, it says.

This outward momentum has continued robustly into 2026.

While domestic gold output from raw materials dropped 14.62% y-o-y to 152.91 tonnes in the 1H26 due to strict safety and environmental inspections, overseas mine production by large state-owned groups reached 48.1 tonnes, a 21.43% increase, according to the CGA.

As the world’s largest gold consumer, China’s rising offshore output demonstrates that proactive mergers and acquisitions are serving as a vital buffer, Zhao notes.

“Chinese enterprises are securing high-quality assets at attractive valuations while deploying advanced extraction technologies,” Zhao says.

“By securing upstream physical assets globally, domestic mining giants are anchoring the country’s physical reserves and steadily expanding China’s long-term influence over global precious metal markets.”

Obstacles remain. Easily accessible, high-grade shallow gold deposits are increasingly scarce worldwide. Cross-border regulatory hurdles also create uncertainty for outbound deals.

Still, domestic exploration continues to deliver large-scale new gold discoveries inside China, Zhao adds.

China’s multi-faceted push on gold reflects both domestic needs and wider global shifts.

Geopolitical fragmentation has pushed numerous developing nations to diversify official reserve assets.

Chinese households, central bank planners and domestic miners are each responding to this new environment.

Industry experts believe that gold will continue to serve multiple functions: festive ornament for consumers, wealth-preservation tool for households, strategic reserve asset for policymakers, and critical mineral resource for industrial players.

As global tensions persist, China’s footprint within international gold markets looks set to deepen, they say. — China Daily/ANN