China's gold jewelry consumption in the first quarter fell by 37.1% year-on-year.

According to the latest data from the China Gold Association, the country's total gold consumption in Q1 2026 reached 303.292 tons, representing a year-on-year increase of 4.41%.

While overall gold consumption maintained growth, significant divergence was observed across different segments.

Specifically, gold jewelry consumption stood at 84.62 tons in Q1, a sharp decline of 37.1% year-on-year, marking the steepest drop for the same period since 2024. In contrast, consumption of gold bars and coins surged to 202.062 tons, up 46.4% year-on-year. Industrial and other gold usage decreased by 7.43% to 16.61 tons.

In terms of international gold prices, both gold futures and spot prices exhibited a volatile upward trend during the first quarter, with gains of 6.78% and 8.13%, respectively.

The China Gold Association attributed the continued pressure on domestic gold jewelry consumption to high and volatile international gold prices, leading to a further decline in jewelry demand. Meanwhile, investment demand for gold remained robust, with gold bars and coins becoming popular investment products, and sales volumes through bank channels seeing substantial growth. Additionally, high gold prices have increased costs for industrial users, resulting in a corresponding decrease in their demand.

Taking a longer-term view, international gold prices have risen from around $2,000 per ounce in 2024, roughly doubling to approximately $4,700 per ounce currently. Domestic gold jewelry consumption has been on a downward trajectory since 2024. Consumption in Q1 2024 was 183.922 tons, a slight year-on-year decrease of 3%. Full-year 2024 consumption was 532.02 tons, down 24.69% year-on-year. In Q1 2025, consumption was 134.531 tons, falling 26.85% year-on-year, and full-year 2025 consumption was 363.836 tons, a decrease of 31.61%.

Domestic gold jewelry prices have skyrocketed from around 620 yuan per gram at the beginning of 2024. Data from Tencent's Licaitong platform shows that as of May 9, gold prices for brands such as Chow Tai Fook, Lao Feng Xiang, Chow Sang Sang, and Luk Fook exceeded 1,430 yuan per gram.

Global Gold Jewelry Demand Declines in Q1

Amid persistently high gold prices, jewelry demand has generally cooled in major global markets. According to the World Gold Council's "Global Gold Demand Trends Report," global gold jewelry consumption demand in Q1 fell 23% year-on-year to 300 tons.

However, overall global gold demand continues to rise. Total global gold demand (including over-the-counter transactions) reached 1,231 tons in Q1, a 2% year-on-year increase. The total value of demand surged to a record $193 billion, a significant 74% year-on-year increase.

The World Gold Council believes that sustained gold purchases by global central banks have supported overall demand. Central banks added 244 tons to their reserves in Q1. Although sales by a few official institutions, such as Turkey, Russia, and Azerbaijan's State Oil Fund, increased during the quarter, central bank purchases remained above the previous quarter's level and the five-year average. This further highlights gold's unique role as a core reserve asset for central banks, particularly its good liquidity during periods of extreme market turbulence.

Looking ahead, Louise Street, Senior Market Analyst at the World Gold Council, suggests that geopolitical risk premiums will continue to support investment demand for gold. However, if interest rates remain higher for longer, investor interest, particularly in European and American markets, may wane. Despite high prices suppressing jewelry consumption volume, the value of consumption is expected to remain resilient.

Gold Prices May Still Have Room to Rise

Since the second quarter began, gold prices have continued to fluctuate. After two consecutive weeks of declines, both London gold and COMEX gold closed higher this week, at $4,713.56 per ounce and $4,723.7 per ounce, respectively, with weekly gains of 2.15% and 1.71%.

Institutional views on future gold price trends are diverging.

In a report in early May, Morgan Stanley lowered its gold price target for the second half of 2026 from $5,700 per ounce to $5,200 per ounce. The firm believes gold's pricing logic is shifting from a geopolitical safe-haven narrative back to a phase dominated by traditional macroeconomic factors such as real interest rates, the US dollar, and liquidity.

Goldman Sachs maintains its forecast for a year-end 2026 gold price of $5,400 per ounce. Analysts at the bank believe that while short-term prices face downside risks from geopolitical tensions and financial market volatility, the medium-term upward logic remains unchanged, supported by central bank purchases, normalization of speculative positions, and potential future interest rate cuts by the Federal Reserve.

Bank of America continues to express bullish sentiment, recently raising its 2026 average gold price forecast from $4,988 to $5,093 per ounce, while maintaining an unchanged 12-month target price of $6,000.

Shenwan Hongyuan Futures believes that from a medium- to long-term perspective, precious metal prices have a foundation for sustained upward movement in their price center. On one hand, the geopolitical risk premium has structurally increased, and the restructuring of the global political and economic order continues. On the other hand, market concerns about US fiscal sustainability are intensifying, while frequent interventions by former President Trump in the Federal Reserve's independence suggest the de-dollarization process will continue, and the trend of global central banks increasing gold reserves will persist.