While investor interest in ETFs rebounded, the physical gold market told a different story. Wholesale demand, measured by Shanghai Gold Exchange withdrawals, dipped 8% month-over-month to 80 tonnes. This decline reflects a persistent seasonal lull and subdued consumer appetite within the jewelry sector, which continues to struggle against higher price points and lackluster consumer confidence.

Futures markets also showed a cooling trend, with daily trading volumes on the Shanghai Futures Exchange falling 4% to 292 tonnes as price volatility subsided. Despite lower turnover, net long positions held by top participants increased by 24 tonnes to 117 tonnes by the end of July. This divergence highlights a market increasingly dominated by strategic positioning rather than speculative day trading.

Parallel to private sector activity, the People’s Bank of China extended its historic buying streak to 21 consecutive months. The central bank added 20 tonnes of gold to its reserves in July, bringing its total holdings to 2,366 tonnes. This sustained accumulation underscores a broader strategy of reserve diversification, providing a consistent floor for the domestic market even as retail jewelry demand remains tepid.