Gold price breaks out in January 2025
The Chinese gold market recorded many important developments in January. Gold prices increased sharply in both international and domestic markets, while the central bank of this country continued to increase gold reserves. This move may have a positive impact on the psychology of domestic investors
LBMA gold price (in USD) increased by 8%, while Shanghai gold price (in USD) increased by 5%, said Ray Jia, Head of China Market Research at WGC. However, the price of gold according to RMB increased more slowly due to the strengthening of the domestic currency and the number of trading days decreased due to the Lunar New Year.
"The domestic Chinese gold market has improved as the central bank continues to buy gold for the third consecutive month," said Ray Jia. Although imports have decreased and ETF capital flows have turned negative, market sentiment shows that consumer demand for gold will tend to increase in the coming time".
This expert affirmed that gold has started 2025 strongly, with LBMA and Shanghai both having the best January prices in many years.
Geopolitical risks and inflation concerns push gold prices to record highs
Jia said key factors contributing to gold prices reaching record levels in January included increased geopolitical risks - such as the Trump administration's tariff policies, increased inflows into gold ETFs and concerns about inflation.
Meanwhile, demand for wholesale gold has improved monthly but is still weak compared to the same period last year.
125 tonnes of gold have been issued from the Shanghai Gold Exchange (SGE), up 3% monthly. The addition of seasonal reserves from jewelry retailers, banks and other market members before the Lunar New Year holiday - the traditional peak period of gold consumption in China - is the main driver for this increase, Jia said.
However, he also noted that a pre-vacation survey in Shenzhen - China's jewelry wholesale and processing center - showed a less optimistic than usual sentiment in the gold retail industry.
Skyrocketing gold prices and demand over the past year have prompted gold jewelry retailers to worry about the possibility of prolonged weakness. They have lowered their holiday sales expectations and stored less than in previous years.
This is reflected in the 54% annual decline in wholesale demand for gold in January but it should be noted that January 2024 is the strongest month in history and this figure is also 37% lower than the 10-year average - he commented.
