China's Gold Market: The December Rebound and What's Trending

The headline for December was clear: wholesale gold demand rebounded. The Shanghai Gold Exchange saw 115 tonnes of gold shipped out last month, a 36% month-over-month increase. This seasonal spark lifted the year's final month, but it also highlights a stark market divergence. For all of 2025, the story was one of decline, with total withdrawals from the SGE down 11% year-over-year and well below the ten-year average.

So, is this December pop a sign of a new trend or just a familiar seasonal blip? The evidence points to the latter. The rebound came even as the broader 2025 trend was record-breaking in another way. The Shanghai Benchmark Gold Price PM posted its strongest annual performance since 2002, surging 58% in RMB terms. This powerful price rally, driven by geopolitical risks and strong ETF inflows, created a headwind for physical demand. The market's attention was clearly on the investment story, not the jewellery counter.

The key tension is that jewellery consumption, the traditional driver of physical demand, has been under pressure. The rebound in December was likely fueled by retailers preparing for year-end sales, a classic seasonal pattern. Yet, even with that lift, December's shipments still showed a 6% year-over-year decline, hampered by a high gold price and tax reforms. This sets up a clear question for 2026: can investment demand, which is clearly trending upward, fully offset the persistent weakness in the consumer jewellery sector? The December numbers suggest the market is still waiting for that answer.

Drivers of the Boom: PBoC, ETFs, and Geopolitical Sentiment

The investment surge is the main character in this story, and its drivers are now clear. The market's attention is laser-focused on three powerful, interconnected forces: central bank buying, ETF flows, and a global risk backdrop. This is the catalyst that has lifted gold prices to record highs and fueled a massive shift in capital allocation.

The most dominant force is central bank demand. The People's Bank of China has been a relentless buyer, purchasing gold for 14 consecutive months through December. In 2025 alone, it added 28.5 tonnes, a move that lifted China's gold reserves to $319.45 billion. This isn't a one-off; it's a strategic, multi-year pivot away from US Treasuries toward physical gold. Analysts note this reflects a lasting shift in reserve management, and the buying has continued unabated even as prices soared.

This central bank buying is mirrored in the retail and institutional investor frenzy. Chinese gold ETFs saw record inflows, with assets under management surging 243% to RMB242bn (US$35bn) by year-end. That's the strongest annual inflow ever for the local market. The trend is even more explosive globally. As the gold price shattered records, global investors poured unprecedented capital into physically backed gold ETFs, driving annual inflows to a record $89 billion.

The common thread linking these flows is a heightened sense of geopolitical and economic risk. The powerful price rally, which saw gold gain 65% in 2025, was fueled by fears over trade tensions and global instability. This risk sentiment is the viral sentiment that has made gold the safe-haven of choice. The soft US inflation data earlier this month only added to the narrative, boosting expectations for Federal Reserve rate cuts and making non-yielding gold more attractive.

The bottom line is a perfect storm of capital chasing safety. Central banks are building reserves, ETFs are seeing record inflows, and global investors are piling in. This isn't a speculative bubble; it's a structural shift in how capital is being deployed. The search volume for gold ETFs and central bank buying has likely spiked, reflecting a market that is fully engaged with this trend. For now, this investment boom is the engine driving the market, even as physical jewellery demand struggles to keep pace.

Search Trends: Gauging Viral Sentiment and Headline Risk

The market's attention is the real story here, and Google Trends data offers a clear window into what's trending. Overall search interest for gold has been on a tear, a classic sign of viral sentiment. The intense focus on geopolitical risks and record price highs has turned gold into a dominant topic of conversation. This isn't just noise; it's a signal that capital is being drawn into the narrative.

The data reveals a market with a split personality. When it comes to jewellery, the search volume tells a tale of high interest but weak conversion. Global searches for "gold jewelry" peaked at 100 in August 2025, a significant jump from the previous year. Yet, this spike in curiosity did not translate into sustained sales growth. The jewellery sector continued to see a year-over-year decline, showing that high prices and tax reforms are keeping buyers at bay, even when they're searching.

The real shift is in the investment category. Search interest for "gold bars" and "gold coins" has surged, with "gold bars" climbing from a low of 14 in January to 38 in August. This divergence is telling. It shows the market's attention is moving from adornment to asset allocation. The search volume for investment-grade physical gold is catching up to, and in some cases overtaking, the traditional jewellery narrative. This aligns perfectly with the record ETF inflows and central bank buying we've seen.

The bottom line is that the intense search interest in gold overall is a clear signal of headline risk and viral sentiment. The market is fully engaged with the story. Yet, the split between "jewelry" and "bars" searches highlights the underlying tension: the investment boom is the main character, while the consumer jewellery sector is struggling to keep pace. For investors, this data confirms the trend is real, but it also underscores the need to focus on the channels driving capital-the ETFs, the central banks, and the physical bars-rather than the seasonal jewellery counter.

The Divergence: Investment Boom vs. Jewelry Weakness

The structural tension in China's gold market is now stark. On one side, a powerful investment boom is driving record flows and prices. On the other, the traditional jewellery sector is in a clear downtrend. The key metric for that weakness is three straight years of declines. In 2025, total wholesale gold withdrawals from the Shanghai Gold Exchange fell 11% year-over-year, continuing a multi-year slump that has seen the market consistently below its ten-year average.

This divergence is the central story. The investment surge-powered by central bank buying and record ETF inflows-has been strong enough to offset jewellery weakness, but only just. The December rebound in wholesale demand was driven by seasonal retail preparation, not a fundamental shift in consumer sentiment. Even then, shipments still showed a 6% year-over-year decline, hampered by high prices and tax reforms. The investment story is the main character, but it is propping up the entire market.

A new development hints at a potential shift in the jewellery narrative. A wave of venture capital is now flowing into a new generation of high-end, heritage gold jewellery brands. Companies like Borland and Lamchiu are attracting significant funding from firms like Kering Ventures and Shunwei Capital. This suggests investor interest is moving beyond mass-market jewellery to premium, investment-grade pieces rooted in traditional craftsmanship. The success of brands like Laopu, which saw revenue soar more than 250% last year, has shown this niche can break out.

This creates a key watchpoint for 2026. If the broader jewellery sector's three-year decline persists, the investment boom may be the only engine for sustained demand. The venture capital influx into premium brands could be a sign that the market is bifurcating: a struggling mass market versus a high-end segment gaining financial backing. For now, the investment story is carrying the load. But if jewellery weakness deepens, the entire demand picture will depend on whether this new wave of premium brands can scale fast enough to fill the gap.

2026 Outlook: Catalysts and What to Watch

The setup for 2026 is clear. The investment boom is the main character, but its sustainability is the key question. To see if the 2025 trend continues, investors must watch three specific catalysts that will signal whether this is a new trend or a fading headline.

First, monitor the People's Bank of China's monthly gold purchase announcements. The central bank has been relentless, announcing gold purchases every month in 2025 and pushing China's official gold holdings to 2,306 tonnes. The trend of consistent buying is the bedrock of the investment story. Any pause or slowdown in these monthly announcements would be a major red flag, suggesting the strategic reserve shift is losing momentum.

Second, track Chinese gold ETF assets under management and holdings. The record inflows of 2025 were staggering, with AUM surging 243% to RMB242bn and holdings more than doubling. The critical watchpoint is whether this momentum continues. If ETF inflows slow or reverse in early 2026, it would signal that the retail and institutional investor frenzy is cooling, and the boom may be a one-time event rather than the start of a new trend.

Finally, watch for any shift in consumer sentiment, particularly in the jewellery sector. The search volume data shows a clear split: high interest in jewellery but weak conversion. The real signal will be a reversal in Google Trends search volume for "gold jewelry" or a slowdown in the venture capital funding flowing into premium brands. The recent wave of VC backing for heritage brands like Borland and Lamchiu is a sign of investor confidence in a niche segment. If this funding dries up or if jewellery search volume declines from its August peak, it would confirm that the broader consumer market remains weak, leaving the entire demand picture dependent on the investment engine.

The bottom line is that 2026 will be a test of durability. The investment boom has carried the market through three years of jewellery weakness. For the trend to continue, the central bank buying must stay on track, ETF flows must hold, and the premium jewellery niche must prove it can scale. Until then, the market will be watching these specific data points for the next catalyst.