Global gold demand rises 3% on stronger investment flows, says WGC

Global gold demand increased 3 per cent year-on-year to 1,249 tonnes during the April-June quarter of the current year, amid a high price environment, World Gold Council (WGC) said in a report on Thursday.

Strong gold investment flows largely fuelled quarterly growth, as an increasingly unpredictable geopolitical environment and price momentum sustained demand, according to WGC's Q2 2025 Gold Demand Trends report.

"Gold ETF investment remained a key driver of total demand, with inflows of 170 tonnes over the quarter, compared with small outflows in Q2 2024.

"Asian-listed funds were major contributors at 70 tonnes, keeping pace with US flows. Combined with record inflows in the first quarter, global gold ETF demand reached 397 tonnes, the highest first-half total since 2020," the report added.

Meanwhile, the total bar and coin investment also increased 11 per cent year-on-year, adding 307 tonnes.

Chinese investors led the way with a 44 per cent year-on-year increase to 115 tonnes, while Indian investors continued to add to their holdings, totalling 46 tonnes in the second quarter.

Divergent trends emerged in Western markets as European net investment more than doubled to 28 tonnes while US bar and coin demand halved to 9 tonnes in the second quarter.

Central banks continued to buy, adding 166 tonnes in the April-June quarter this year, led by Poland, Turkey and Azerbaijan.

Despite this deceleration, central bank buying remained at significantly elevated levels due to ongoing economic and geopolitical uncertainty.

"Our annual central bank survey shows that 95 per cent of reserve managers believe that global central bank gold reserves will increase over the next 12 months," the report said.

Jewellery demand continued to decline, with the volume of consumption down 14 per cent and nearing low levels last seen in 2020 during the COVID pandemic.

Jewellery demand in China was down 20 per cent, and Indian demand fell 17 per cent year-on-year. However, in value terms, the global jewellery market increased to a total of USD 36 billion.

"The overall jewellery has dropped to 341 tonnes but increased in value to about USD 36 billion, which is interesting. From a Chinese demand perspective, it's down 20 per cent in terms of volume. In India...down by 17 per cent in terms of volume. But again, in terms of value, it's significantly higher than last year," Sachin Jain, WGC Regional CEO - India, told PTI.

Further, the report revealed that the total gold supply increased 3 per cent to 1,249 tonnes, with mine production up marginally to a new second quarter record.

Recycling increased 4 per cent year-on-year but stayed relatively subdued considering the high price environment.

"Global markets have navigated a volatile start to the year marked by trade tensions, unpredictable US policy shifts and frequent geopolitical flashpoints. The robust investment activity we have seen in the first half of 2025 underscores gold's role as a hedge against economic and geopolitical risks. Ongoing market volatility, coupled with gold's impressive price performance in recent months, has also generated significant momentum, drawing capital from investors around the globe," Louise Street, Senior Markets Analyst at WGC, said.

She said that gold recorded 26 per cent appreciation in the first half of the year in dollar terms, outperforming many major asset classes.

"With such an impressive start to the year, it is possible that gold could trade within a relatively narrow range in the latter half of 2025.

"On the other hand, the macroeconomic environment remains highly unpredictable, which may underpin further gains for gold. Any material deterioration in global economic or geopolitical conditions could further amplify gold's safe-haven appeal, potentially pushing prices higher still," she added.