China’s H1 Gold Output Falls 14.6%, Consumption Rises

China’s gold production declined sharply in the first half of 2026 while consumption edged higher, according to data released Thursday by the China Gold Association. Domestic gold output fell 14.62% year-on-year to 152.908 tonnes, while total gold consumption rose 1.23% to 511.412 tonnes, reflecting a structural shift in how the world’s largest gold market is evolving.

Production: Safety Inspections and Overseas Expansion

The production decline was driven primarily by comprehensive mine safety inspections and special governance programs implemented in key gold-producing provinces during the first half of the year. As the China Gold Association explained, some mines suspended operations for self-inspection, which affected domestic output to a certain extent.

Imported raw material gold production, however, bucked the trend, rising 4.62% year-on-year to 77.080 tonnes. Combined domestic and imported production totaled 229.988 tonnes, down 9.01% from the same period last year.

Large Chinese gold groups continued their overseas expansion, with overseas mine production reaching 48.098 tonnes in H1 2026, up 21.43% year-on-year. Zijin Mining’s Ghana Akim Gold Mine and Kazakhstan Ruigedo Gold Mine contributed to this growth, alongside steady gains from China Gold, Shandong Gold, and Shandong Zhaojin, according to China.com.cn.

Consumption: A Tale of Two Markets

The consumption data reveals a dramatic divergence between investment demand and jewelry demand. Gold jewelry consumption plunged 33.88% year-on-year to 132.133 tonnes, while gold bars and coins surged 28.42% to 339.336 tonnes. Industrial and other uses fell 2.90% to 39.943 tonnes.

“With high gold prices experiencing significant fluctuations combined with the implementation of new gold tax regulations, the domestic gold consumption structure continues to differentiate, with gold bars and coins becoming popular market categories,” the China Gold Association said. High gold prices have also pushed up costs for industrial enterprises, leading to a decline in industrial gold usage.

The new gold tax policy, implemented in November 2025, widened the tax gap between investment gold and jewelry gold. Investment gold bars purchased through Shanghai Gold Exchange primary members can have VAT fully deducted, while jewelry gold carries approximately 12 percentage points of additional tax costs passed to consumers, as noted in an expert roundtable hosted by JD Wealth.

Market Dynamics: Prices, Trading, and ETFs

Gold prices remained elevated despite a pullback from January’s record highs. At the end of June, the SGE Au9999 benchmark closed at 879.03 yuan per gram, down 11.21% from the year’s opening price of 990.00 yuan. London spot gold fixed at $4,026.05 per ounce, down 8.22% from the start of the year.

Trading data showed a characteristic of shrinking volume but rising transaction value. The Shanghai Gold Exchange saw all gold products volume fall 4.37% to 32,100 tonnes (double-sided), while transaction value surged 36.75% to 33.14 trillion yuan. The Shanghai Futures Exchange recorded a 22.46% decline in gold futures and options volume to 117,100 tonnes, with transaction value up 4.80% to 93.15 trillion yuan.

Domestic gold ETF positions increased by 28.677 tonnes in H1 2026, down 66.17% from the same period last year, reflecting weaker gold prices and reduced investor enthusiasm. Total ETF holdings stood at 276.529 tonnes at the end of June.

Reserves: Continued Accumulation

Despite the production and consumption dynamics, China continued its aggressive gold reserve accumulation. The country added 40.12 tonnes in H1 2026, bringing total reserves to 2,346.45 tonnes — ranked fifth globally. This marks the 20th consecutive month of increases since November 2024, as Lianhe Zaobao reported.

The reserve accumulation reflects a broader global trend. In Q1 2026, global central banks purchased 244 tonnes of gold, while total global gold demand rose 2% to 1,231 tonnes, according to data cited by China Fund News.

Outlook: Volatility and Structural Change Ahead

The China Gold Association cautioned that while gold prices have fallen, they remain at historically high levels, with increased short-term volatility and market risk. The structural shift toward investment-grade gold is expected to continue, with jewelry consumption likely to remain under pressure.

Gold mining companies, meanwhile, reported strong H1 earnings despite the price pullback. Zijin Mining expected net profit of approximately 39.1 billion yuan, up 68% year-on-year, while several other major miners also projected significant profit gains, according to 21st Century Business Herald.

Looking ahead, market watchers will be watching whether gold prices stabilize, how the consumption structure continues to evolve, and whether China’s central bank extends its record streak of monthly reserve purchases. The interplay between high prices, shifting consumer preferences, and policy changes will define the trajectory of the world’s largest gold market in the second half of 2026.