China’s gold demand has dropped, with imports falling to a seven-month low. In the last month, net imports were just 8 tons, the lowest since March, when China exported more gold to Hong Kong than it brought in. Gold prices hit record highs in October, which has led to this reduced demand. Recent data shows Swiss gold exports to China plummeted by over 90% last month.

Surge in Exports to Hong Kong

Total gold imports have fallen to 30 tons, the lowest in recent months. At the same time, gold exports from China to Hong Kong jumped to 22 tons, reaching a seven-month high. In the first ten months of this year, China’s net imports from Hong Kong fell by 45% compared to last year. This decline happened alongside a 160% increase in exports and a slight import decrease of 6%. With gold prices peaking over $2,550 per ounce in October 2025, the significant drop in Chinese imports is a worrying sign for the market. This slowdown from one of the largest buyers suggests that the recent price surge isn’t sustainable. The spot price has already dipped, trading around $2,480 an ounce this week. This indicates a possible price correction in the coming weeks, especially with fewer Chinese buyers to support the market. Derivative traders might want to consider near-term put options with strike prices below $2,450 for January 2026 expiration. Selling out-of-the-money call credit spreads could also be a good way to earn premiums while betting on limited price increases.

Market Sentiments and Predictions

The decline in demand is noticeable not only among consumers but also within the official sector. The People’s Bank of China added only 5 tons in October, a sharp drop from its average monthly purchases of over 18 tons earlier this year. This official reduction shows that even at the state level, the current prices are deemed too high. We see the same sentiment in institutional investment trends. Global gold-backed ETFs experienced net outflows of $1.5 billion in November, reversing the modest inflows during the price increase in October. This suggests larger investors are taking profits, adding to the selling pressure. The situation worsens with recent comments from the U.S. Federal Reserve, indicating they may keep interest rates steady through the first quarter of 2026. A strong dollar and high interest rates typically create challenges for non-yielding assets like gold. The dollar index has already surpassed 106.5 this month, making gold less attractive. A similar situation occurred in mid-2023, when a quick price surge caused a significant drop in physical demand from Asia before the price stabilized. This pattern suggests gold might test lower support levels around the $2,400 mark before demand picks up again. Traders should watch for signs of increased physical buying as an indicator that the correction may be coming to an end. Create your live VT Markets account and start trading now.

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