China’s Insurance Funds Inject New Vitality into Global and Domestic Gold Markets

Gold is a generator of long-term returns, providing an average annual return of 8.6% in US dollars since the end of the Bretton Woods system in 1971. Meanwhile, since the inception of Shanghai Gold Exchange in 2002, gold priced in Chinese yuan has seen a higher annualized return of 9.8%. China, the world’s second-largest insurance market, has a growing demand for diversifying its insurance funds into new asset classes. Gold’s low correlation with other assets and its stable long-term returns make it a high-quality, non-traditional asset for insurance portfolios. Incorporating gold into these portfolios brings the potential for lower volatility, higher returns, and an optimized risk-return profile, preserving or even enhancing the asset value. Furthermore, amid rising global uncertainties, gold’s well-established role as a hedge against risk positions it as an effective tool for insurance funds to navigate global systemic risks.

David Tait, CEO of the World Gold Council, says, “We are pleased to see China actively exploring ways to involve insurance funds in gold investments, a move that will have significant implications for the future development of both China’s insurance and gold markets. Since 2013, China has established itself as both the world’s largest producer and consumer of gold. Allowing insurance funds to invest in gold will further promote the development of China’s gold investment market, drive product innovation, optimize the investor structure in China’s gold market, enhance its international influence and competitiveness, and thus inject new vitality into the global gold market.”

The World Gold Council (WGC) has long been committed to promoting the healthy development of the global gold market and enhancing participants’ understanding of gold as a strategic asset. The WGC has been supporting and collaborating with the Insurance Asset Management Association of China (IAMAC), the Shanghai Gold Exchange (SGE), and the China Gold Association (CGA) to conduct ongoing research on the feasibility, pathways, methodologies and risk management measures for insurance funds investing in gold, providing international expertise and technical support. In December 2024, IAMAC, in partnership with WGC, launched the “Insurance Investment Studies: Gold Investment” report.

Gold’s role as a safe-haven asset has become more pronounced amid increasing uncertainty in the global political landscape. As mentioned in our recent Gold Outlook 2025, “the market consensus on key macro variables, such as GDP, yields, and inflation, suggests positive but more modest growth for gold in the coming year.” Similarly, according to our latest Gold Demand Trends: Full Year 2024, “In 2025, we expect central banks to remain in the driving seat…Geopolitical and macroeconomic uncertainty should be prevalent themes this year, supporting demand for gold as a store of wealth and hedge against risk.”