Gold is on a tear—and China's retail army is throwing gasoline on the fire. Daily trading volumes on the Shanghai Futures Exchange have exploded past a million contracts, with barely any change in open interest. Translation? Pure day-trading madness. Local gold-backed ETFs are seeing inflows that already top last year's totals, and premiums over global prices have blown out to record highs. Chinese investors aren't just buying the dip—they're buying the fear. And the backdrop couldn't be more charged: a shaky economy, Trump's tariff return, a fragile yuan, and growing belief that the U.S.-China relationship may be broken beyond repair.
Analysts are warning of a full-blown retail mania. Social media is lit up with posts of people going all-in on gold, even borrowing money to chase the rally. Banks are reportedly running out of physical bars. And while the Shanghai Gold Exchange is trying to cool things down with volatility warnings, few seem to be listening. According to John Reade at the World Gold Council, it's this massive retail surge that helped push gold to a new all-time high this week. Meanwhile, long-term bulls like Goldman Sachs (GS, Financial) and China International Capital Corp. are eyeing $4,000 to $5,000 per ounce targets. In this climate, those calls aren't sounding so crazy.
For global investors, this isn't just another gold rally—it's a signal. The world's top gold buyer is piling in with conviction, not just speculation. Central bank demand is still strong, and Chinese households are treating gold not just as a hedge, but as a vote of no confidence in the system. Stocks with gold exposure may see speculative inflows as sentiment snowballs. Bottom line: gold isn't just reacting to macro fear. It's becoming the trade.
