Gold demand in China is showing signs of a strong rebound, even as global gold flows remain active between the UK and the US. Meanwhile, analysts are observing a potential slowdown in silver demand from the solar industry, raising questions about the long-term trajectory of precious metal markets.
Recent data from the Shanghai Gold Exchange (SGE) indicates a significant uptick in wholesale gold withdrawals, a key measure of Chinese demand. Typically, gold demand surges in December and January as manufacturers and retailers stock up ahead of the Chinese New Year. This year, January withdrawals are expected to align with historical averages of around 190 tonnes, marking a 23% increase from December levels. However, despite this seasonal rise, total gold demand in China remains below historical highs, reflecting the ongoing struggles of the jewelry sector, with major retailers such as Richemont, Chow Tai Fook, and Chow Sang Sang reporting declining revenues.
The price of gold has remained strong, reaching a new all-time high of $2,830.75 per ounce before settling around $2,818. Analysts believe the continuous rise in gold prices could impact Chinese consumer demand, as higher costs may deter some buyers despite strong seasonal trends.
At the same time, the movement of gold between London and the US continues at a rapid pace. Since the start of the year, US gold inventories have surged by nearly 8,000 koz, with weekly inflows exceeding 1,720 koz. This rush to store gold in US vaults is partly driven by fears of potential new tariffs on precious metals under Trump’s economic policies. London’s vaults are experiencing longer processing times due to this increased demand, with wait times extending from a few days to nearly a month.
In the silver market, analysts are closely watching China’s solar industry, a key driver of silver demand. China installed 886.66 GW of photovoltaic (PV) solar capacity in 2024, a 46% year-on-year increase. While impressive, this growth rate is lower than the 54% increase seen in 2023. Industry experts suggest that China’s solar expansion may have peaked, especially as leading polysilicon and solar panel manufacturers have agreed to limit production and raise prices to restore profitability. If this trend continues, the demand for silver in the solar sector could slow, potentially affecting global silver prices.
Despite the potential slowdown in silver demand from solar applications, silver prices have remained strong, with spot silver trading at $31.48 per ounce, up 0.50% on the daily chart. As the global economy adjusts to new tariffs, interest rate policies, and inflation concerns, both gold and silver remain key assets for investors navigating market volatility.
