Chinese Households Increase Gold Purchases Amid Price Drop Below $4,000

Chinese households are buying more gold amid falling prices, supporting the metal as it dips below $4,000. On the Shanghai Gold Exchange, the Au99.99 contract traded 43 million lots last week – approximately 430 tons. This is the most active period since April, Bloomberg reported.

Buyers must pay for the delivery in full and accept the metal, so the volume reflects physical purchases rather than leveraged bets. "Domestic demand for gold is increasingly going against the price trend, strengthening as prices fall," said Jinrui Futures analyst Zizhe Wu.

A significant portion of purchases is made through bank accumulation plans, allowing gold to be bought in small amounts gradually. Data for the first nine months show that purchases through such plans exceeded the entire year of 2025, and major banks noted an acceleration last week. An April report from the Shanghai Exchange, citing central bank data, indicated that in 2025 banks sold consumers 2,187 tons – more than triple the amount in 2024, although the gross figure does not account for metal sold back.

China's central bank also bought during the dip: in September, the People's Bank added 740,000 ounces – the maximum since October 2023. The purchase occurred in a month when gold fell by more than 6%, extending the buying streak to 23 consecutive months.

Why they are buying

Weak domestic yields may explain the rise in demand. The Chinese stock market has lost $2.4 trillion in value since its peak in May, the CSI 300 index entered a bear market last week, and Morgan Stanley expects further losses. Real estate remains in decline, and the yield on five-year government bonds reached a record low on Tuesday. Amid falling yields in stocks, real estate, and bonds, Chinese savers have turned to gold.

Gold is currently trading at $3,996.96, down 0.50% for the day; it fell below $4,000 on October 23 – for the first time since July. Justin Lin from Global X ETFs considers $3,900 the next key test, and Bank of America allows for a minimum of $3,750. Lin expects that a softer view on rates will help gold in the near term, making the Fed's decision on Wednesday significant. If Chinese stocks recover, some money may flow out of gold. Until then, holding $4,000 partly depends on how long Chinese households continue to buy the dip.