Why China's going all in on gold and India isn't, says Financial adviser
This strategic shift was highlighted by Alok Jain, founder of Weekend Investing. In a recent post on X, Jain noted, 'China is encouraging citizens to hold more gold.' He added, 'They know gold has a future,' contrasting China's approach with India's restrictive stance on gold loans and high import duties.
— WeekendInvestng (@WeekendInvestng)
State-led push triggers surge in gold demand
In March 2025, China took a decisive step. The
China Banking and Insurance Regulatory Commission
(CBIRC) issued Directive No. 2025-03, which requires all insurance companies to invest at least 1% of their assets — over ¥4.5 trillion — into physical gold.
To enable this, insurers were granted access to the Shanghai Futures Exchange (SHFE), bypassing global trading platforms. This marks the first time insurance firms have been given such direct entry, according to SHFE.
Live Events
These moves build on a 2024 campaign by the People's Bank of China urging citizens to buy physical gold, which led to a 34% increase in national gold consumption year-on-year.
Behind the numbers: a two-decade build-up
China's gold accumulation isn't new. Since 2000, it has grown official
gold reserves
from 395 tonnes to over 2,200 tonnes. But some analysts believe Beijing holds more than 5,000 tonnes, much of it acquired through discreet, off-market deals.
The aim? Reduce dependence on the US dollar and cushion the economy against geopolitical shocks. And with global uncertainty rising, the plan seems to be gaining momentum.
India's gold story: rich in culture, light on policy
India, by contrast, remains heavily gold-dependent at the household level but lacks a coordinated national gold policy. Indian families, especially women, collectively hold more than 25,000 tonnes of gold — mostly in the form of jewellery.
But high import duties and restrictions on gold-backed lending limit broader financial leverage. While the cultural value of gold is high, its strategic utility remains untapped at the policy level.
Markets react to trade talks and tariffs
On Tuesday morning, MCX Gold August contracts rose 0.72% to ₹96,475 per 10 grams, reflecting cautious optimism surrounding
US-China trade talks
in London.
Reuters reported that US President Donald Trump had said his administration was "doing well" in the negotiations and received "positive reports from the talks".
But the details remain vague. A new framework agreement is in place, building on last month's Geneva discussions, yet both Trump and President Xi Jinping have yet to approve it.
'Any positive developments from the talks could provide headwinds for gold prices, while a stalemate in talks is likely to renew the precious metal's appeal,' said Zain Vawda, market analyst at OANDA.
Inflation, bonds and the dollar
Investors are also eyeing the US Consumer Price Index (CPI) data, due later today. Inflation is expected to stay sticky. A weaker dollar ahead of the data release has already helped lift gold.
Aksha Kamboj, Vice President of India Bullion and Jewellers Association, said, 'Market participants are closely monitoring the ongoing US-China trade negotiations taking place in London, alongside key inflation data set to be released this week in both India and the US.'
She added, 'Attention is also on the upcoming long-term bond auction in the US on Thursday; a weak response could spark renewed interest in gold at lower price levels.'
Can gold really hit $3,400?
Gold futures rose to $3,350.10 per ounce on Wednesday, while spot gold reached $3,329.70. Analysts see potential for further gains if inflation continues and trade talks stall.
'If it does not [fall], then a run toward the $3,400/oz level and beyond starts to look like a real possibility,' said Vawda.
Meanwhile, a US court ruling has kept Trump-era tariffs in place. These "liberation day" tariffs, set to kick in by early July, could add to inflation pressures and drive further interest in gold.
China keeps buying gold
In May, the People's Bank of China added 60,000 troy ounces of gold to its reserves. This marks the seventh straight month of additions, pushing total holdings to 73.83 million troy ounces.
This steady accumulation is a key reason why global gold prices may remain elevated in 2025.
Other metals feel the heat
While gold gained, silver futures fell 0.9% to $36.328 per ounce. Platinum surged 3.6% to $1,255.65, and copper dropped 1.4% on the London Metal Exchange.
In the US, copper futures also declined 2.3% amid concerns over high tariffs and slowing global demand.
Gold is back in the spotlight. China is betting big, not just on cultural affinity but on financial strategy. Trade talks, tariffs, and inflation data will shape the path ahead, but one thing is clear: gold is more than tradition now. It's a play on the future.
As Jain put it, "They know gold has a future."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
10 minutes ago
- Hindustan Times
UK FTA is a turning point in how India engages with West
The signing of the free trade agreement (FTA) between India and the UK last week was no ordinary moment — not just because 99% of Indian exports to the UK will now enter tariff-free, or because British luxury cars and Scotch whisky are about to get cheaper. The real story is India's evolving place in global trade — more assertive, more selective and no longer willing to play by someone else's rulebook. The immediate economic benefits are eye-catching. For British exporters, tariff cuts on whisky (down from 150% to 75% right away, and to 40% in a decade), high-end vehicles, cosmetics and dairy offer new access to India's swelling consumer base. For Indian exporters — particularly in textiles, jewellery, EVs, marine products and generics — the UK market is now wide open, with tariff advantages over rivals like China and Vietnam. The UK's access to Indian public procurement markets and its offer to exempt Indian professionals from social security payments sweeten the deal further. Also, Indian yoga teachers, chefs and tech workers will find short-term visas easier to secure— a meaningful breakthrough on the politically sensitive issue of mobility and immigration India's MSMEs are expected to be among the biggest winners. Industry analysts estimate a 30-40% rise in Indian exports to Britain in the next five years. That's not just numbers on paper — that's jobs on the ground, especially in states like Gujarat, Tamil Nadu and Maharashtra. But perhaps the most significant thing about this deal is what isn't in it — agriculture. India drew a red line, clearly flagging at the outset that it's non-negotiable, which the UK respected. Our government is fully aware of our responsibility to protect the rights of our farmers. Opening up Indian farming to global agribusiness is politically radioactive. The UK agreement avoids that minefield. This signals something larger: India is happy to do trade, but only on terms that don't destabilise our broader economic progress. This new pragmatism — open on industry, cautious on food — could now become the blueprint for other negotiations, particularly with the ongoing one with the US. Hours after the India-UK deal was inked, eyes turned to the US. Trade talks with the US have been ongoing for some months. On Thursday, India's ministry of external affairs confirmed that both sides are working on the 'first tranche' of a multi-sector Bilateral Trade Agreement (BTA). Behind the scenes, pressure is mounting. After reimposing 10% reciprocal tariffs on global exports in April 2025, the US specifically slapped a 26% tariff on Indian goods, though a pause was granted till August 1. That ticking clock now adds urgency to the ongoing BTA talks. Here's the sticking point: The US wants access to India's agriculture and digital markets. India, meanwhile, wants tariff rollbacks, supply chain integration and protection for its strategic sectors. The Union government is clear: India will negotiate hard and the US should not mistake flexibility for submission. The UK deal becomes a silent message to the US: We're open to trade but we won't be bullied. The UK FTA also shifts the geopolitical axis slightly. Post-Brexit, Britain badly needed a big trade deal. India, flush with economic confidence and global attention, was in no rush. That power asymmetry is visible in the final text of the agreement— cautious, layered, incremental. This is not a one-shot silver bullet. It's a living document, built to expand, revise tariffs and add new sectors over time if required. For India, the pact also sends signals elsewhere, to the EU, Japan and Asean. In July alone, the US concluded trade deals with Vietnam, Japan and Indonesia — all part of its Indo-Pacific economic strategy. India, however, is forging its own path. It's building a trade perimeter that keeps sovereignty intact while enabling access and investment. There is, of course, no escaping the historical undertones. Two centuries ago, Britain came to India in the name of trade and stayed to conquer and rule. Today, Britain is back, but on an even keel. That reversal is more than symbolic. Indian policymakers, once wary of the term free trade because of its colonial baggage, are now redefining it. The FTA is not about deference, it's about mutual interest. India is opening doors, but it's also setting terms. This is more than a trade agreement. It is a shift in posture. It is a turning point in how India engages with the West. Gone is the tentative, aid-seeking India of old. This is a country that brings its own terms to the table, and expects others to adapt. The British see this deal as a lifeline in a post-EU economy. India sees it as leverage, a card it can play while negotiating with bigger economies like the US and EU. Undoubtedly, this trade deal is historic. Not just for what it delivers, but for what it represents — the arrival of a more assertive, strategic, and self-confident India on the global trade stage. As for the Americans, they would be wise to study the UK deal not as a template to copy, but perhaps as a warning. Push too hard, especially on food and data, and India will simply say no. Syed Zafar Islam is a national spokesperson of the BJP and former member of Parliament. The views expressed are personal
Time of India
13 minutes ago
- Time of India
‘Probably will know in an hour…': Donald Trump and EU chief begin trade deal talks in Scotland; seen as make-or-break
Donald Trump trade deals (AI image) US-EU trade deal: US President Donald Trump has begun trade deal talks with European Union chief Ursula von der Leyen in Scotland. Ahead of the talks, Trump spoke of the likelihood of a trade deal saying, '. .probably will know in an hour.' Trump and Ursula von der Leyen are looking to resolve a prolonged transatlantic trade dispute as the deadline approaches. Earlier Trump indicated a 50 percent probability of reaching an agreement with the European Union, which faces a reciprocal tariff of 30% unless a trade agreement is secured by August 1, with US officials confirming on Sunday that "no extensions" would be granted. Von der Leyen's European Commission, representing EU member states, is actively pursuing an agreement to protect trade relations valued at $1.9 trillion annually in goods and services. An EU diplomatic source told AFP that a framework for agreement emerged following late-night discussions on Saturday, several crucial matters remained unresolved. The ultimate decision remains with Trump. A diplomatic source was quoted as saying that while a political agreement exists, it awaits Trump's approval, who is maintaining negotiations until the final moment. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If you have a mouse, play this game for 1 minute Navy Quest Undo The suggested arrangement includes a standard 15% tariff on European Union exports to the US, matching Japan's agreement, with exemptions for crucial industries such as aircraft and spirits, excluding wine. EU member states must ratify any agreement. Their ambassadors, whilst in Greenland, received updates from the commission and planned subsequent meetings following potential agreement confirmation. The EU representative indicated that the 27 nations broadly supported the proposed arrangement, whilst maintaining their established negotiating positions. The summit between Trump and von der Leyen is taking place at Turnberry along Scotland's southwestern shoreline, at the president's golf establishment, where he spent considerable time playing over the weekend. Trump, aged 79, expressed on Friday his aspiration to achieve a significant agreement with the EU. "I think we have a good 50-50 chance," the president stated, noting approximately 20 unresolved matters. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
21 minutes ago
- Time of India
Trump says US very close to a deal with China, 50-50 chance of having a deal with EU
US President Donald Trump today said that the United States is very close to a deal with China. During a press briefing with European Commission President Ursula von der Leyen , Trump also said that there is a 50-50 chance of having a US-EU trade deal but he said that the main sticking point is the fairness.
