This post is pure speculation, so here goes:
How can the demand for gold out of China be so high and the global price of gold so low?
Perhaps, and this is a big PERHAPS, a deal has been done with the Americans. China holds over a trillion dollars in US bonds at interest rates that are below the real rate of inflation and issued by a country that has a long term goal of depreciating its currency through never ending QE.
They would love to get rid of these bonds but doing so would crash the US economy. So perhaps the governments got together so they can both get what they want. China wants gold, lots of gold, thousands of tonnes of gold, but in a normal market that would spike prices through the roof.
So is America suppressing paper gold so China can scoop up physical gold In exchange for China not offloading its bonds and destroying what little economic credibility is left in the US? We will never know.
By the way, China collects enough interest from America to fund its entire military budget…food for thought.