Will China's Bargain Hunters Keep Gold Above $4,000?

As gold slips under $4,000, households in China are stepping up their purchases and giving the metal a cushion. A closely watched Shanghai contract just recorded its strongest weekly volume since April.

The demand shows up at a time when gold owners could use some support. Gold has fallen 7.73% since the start of the year, and the Federal Reserve is set to announce its rate decision on Wednesday.

Shanghai Buyers Step In as Gold Gets Cheaper

Last week, 43 million lots of the Au99.99 contract changed hands on the SGE, China's main bullion market. That is close to 430 tons and amounts to the heaviest trading week since April, according to Bloomberg.

The contract requires full upfront payment and physical delivery, meaning the activity points to actual buying instead of leveraged speculation. Zijie Wu, an analyst at Jinrui Futures, noted that Chinese demand is now moving in the opposite direction to prices.

“Domestic gold demand is increasingly running against the price trend, strengthening as prices fall,” Wu said.

Bank accumulation programs account for a good portion of the buying, letting people acquire gold gradually in small increments.

In the first nine months, purchases via those programs have reportedly already exceeded the full-year 2025 figure. Managers of such plans at large banks say activity accelerated last week.

Lenders sold 2,187 tons to consumers in 2025, according to central bank data contained in an April SGE report. That was more than three times the 2024 total, though the gross number does not account for metal later resold.

The People's Bank of China (PBOC) has also been accumulating gold throughout the downturn. The central bank bought 740,000 ounces in September, its largest addition since October 2023.

That acquisition came in a month that saw gold lose more than 6%. It also kept alive a run of monthly buying that now stands at 23 consecutive months.

A Stock Market Slide Pushes Chinese Savers Toward Gold

Weak domestic returns may be part of the reason Chinese gold demand has climbed. The nation's equity market has given up $2.4 trillion in value since reaching a peak in May.

Last week, the benchmark CSI 300 index moved into a bear market. Morgan Stanley predicts further declines before a floor is established for Chinese stocks.

The property sector is still depressed, and the yield on China's 5-year bond set a record low Tuesday. As payoffs shrink in equities, real estate and fixed income, Chinese households have been shifting into gold for protection.

Gold Dips Below $4,000 Again as Fed Meeting Approaches

Gold was quoted at $3,996.96 at the time of writing, off 0.50% for the session. The metal first slipped beneath $4,000 on October 23, its first time below that threshold since July.

Global X ETFs' Justin Lin points to $3,900 as the next important level to watch. Bank of America has identified $3,750 as a potential downside target.

Lin anticipates that a less restrictive rate path will aid gold over the near term, putting added emphasis on Wednesday's Fed decision.

A recovery in Chinese equities could send some of that cash flowing out of gold again. In the meantime, whether gold can keep its footing above $4,000 may rely in part on how much longer Chinese households continue to buy on dips.