Shanghai Gold Premium Rises to 22 yuan/gram; Clear Asian Demand Signals
On July 31, 2026, during Asian trading hours, spot gold held steady near $1,955/oz in a narrow range, with an intraday band of less than $8. However, the Chinese market conveyed a distinctly different level of heat - the main Shanghai Gold Exchange contract AU9999 was quoted at 455.2 yuan/gram at midday, which, after conversion at the real-time exchange rate, represented a premium of 22 yuan/gram over international gold, the highest in nearly two weeks. This data directly shows that despite the recent consolidation in international gold prices, domestic physical buyers are actively stepping in, becoming an important force underpinning prices.
Meanwhile, international silver was relatively firm, with spot silver above $24.5/oz, up 0.4% on the day, extending this week's modest uptrend. The gold/silver ratio fell to around 79.8, significantly narrowing from 82.5 at the start of the month, indicating silver is gaining additional demand support.
Lower Jewelry Store Quotes Spur Consumer Enthusiasm; Investment Bar Demand Surges
As international gold pulled back from the mid-July interim high of $1,980, major domestic jewelry brands lowered their displayed pure gold quotes to about 585 yuan/gram, down nearly 15 yuan/gram from the beginning of the month. The price pullback quickly ignited consumer buying. According to reporters' visits to jewelry stores in Beijing and Shanghai over the weekend, despite not being the traditional peak season, counters saw a steady stream of customers inquiring about and buying gold jewelry, with some popular styles even out of stock.
The World Gold Council's latest Gold Demand Trends Q2 report corroborates this phenomenon: in Q2 2026, China's investment demand for gold bars and coins jumped 27% year on year to 78 tonnes, the highest for that quarter in nearly four years. The report noted that investors took advantage of the price pullback to allocate, combined with increased promotion through bank channels, driving rapid growth in physical investment demand.
Central Bank Gold Buying Continues, Providing Long-Term Support to Gold Prices
In addition to household demand, official sectors have also been steadily increasing gold reserves. According to data released by the International Monetary Fund (IMF), in June 2026 the People's Bank of China increased gold holdings for the ninth consecutive month, adding 6 tonnes that month and lifting total reserves to 2,345 tonnes. The pace of gold purchases by emerging-market central banks has not slowed overall; global central banks bought a net 339 tonnes in Q2, up 15% year on year. Central bank buying, as a long-term strategic allocation, builds a solid floor under gold prices.
Analysts pointed out that the current gold market shows a structural pattern of "the East buying, the West watching." Data from CME show that net long positions in COMEX gold futures are down about 18% from their peak, while spot turnover at the Shanghai Gold Exchange rose 30% month on month. This divergence in capital flows has significantly increased Asia's weight in short-term pricing.
Silver Solar Demand Beats Expectations; Supply Gap May Widen
Silver's relative strength this round largely stems from stronger-than-expected industrial demand. According to the latest data from the National Energy Administration, China's newly installed solar PV capacity in H1 2026 reached 153 GW, up 40% year on year and far exceeding institutional forecasts at the start of the year. Based on roughly 60 tonnes of silver consumed per GW of PV modules, China's solar industry alone contributed more than 9,000 tonnes of silver demand in H1, accounting for nearly 20% of global supply.
At the same time, silver supply faces bottlenecks. The Silver Institute estimates that global silver mine output in 2026 will grow only 1.2%, far below the 5% growth in industrial demand. This leaves the silver market in a supply-demand deficit for the fifth consecutive year, with the gap expected to widen to 1,800 tonnes. Under this tight balance, speculative funds have begun increasing silver allocations, and ETF holdings have risen for three consecutive weeks.
Analysts: Near-Term Focus on PCE Data; Long-Term Trend Upward
Looking ahead, market attention is focused on the US June core PCE (Personal Consumption Expenditures) price index due for release this evening. If the data comes in below expectations, it would reinforce the case for the Federal Reserve to cut rates this year and provide fresh upside momentum for precious metals; otherwise, gold may continue to consolidate around $1,950.
Independent precious metals analyst Chen Tao said: "Asian physical demand is the firmest underlying support for the market at present. Whether from the Shanghai gold premium or domestic jewelry store consumption, dip-buying is very active. Even if short-term macro data triggers volatility, the downside for gold and silver prices is relatively limited. In the medium term, structural forces from central bank gold purchases and solar silver paste demand will continue to push the precious metals price center higher."
As of 14:00 Beijing time, spot gold was at $1,955.6/oz and spot silver at $24.52/oz. On the Shanghai Gold Exchange, AU9999 was at 455.2 yuan/gram and Ag(T+D) at 5,430 yuan/kg.
