Gold demand rises 1% in Q1 2025

Gold demand has started 2025 on a strong note, surpassing the $3,000 mark with global demand slightly up year-on-year. The first quarter saw a revival in gold ETFs, strong central bank buying, and robust retail demand out of China, shaping the market trends. According to Krishan Gopaul, Senior Analyst EMEA at the World Gold Council, the first quarter of 2025 saw a 1% increase in demand to 1,206 tonnes, marking the highest Q1 in the series dating back to 2016. The surge in gold prices, up 40% year-on-year, fueled a significant amount of spending on gold. Factors like surging ETF demand and continued strong central bank buying contributed to the positive response in Q1. Gold ETFs, trading like stocks, provide an accessible way for investors to gain exposure to gold. The physically backed ETFs have attracted both retail and institutional investors globally, with notable interest from North America and particularly China. The trend has continued into Q2, highlighting the ongoing appeal of gold as an investment option. In addition to ETFs, the market for gold bars and coins, popular among retail investors, remained healthy in Q1 with a 3% increase compared to the previous year. China notably witnessed the second-highest quarter of investment demand on record since 2000. The higher levels of uncertainty, concerns over inflation, and economic growth have driven investors towards gold, whether through ETFs or physical products like bars and coins. Central banks also continued their strategic gold buying in Q1, acquiring 244 tonnes, maintaining a trend seen over the past 15 years. The reasons for central banks holding gold, such as its performance in times of crisis and ability to hedge against inflation, have been key drivers of their continued purchases. Despite the economic volatility, the jewelry segment of the gold market faced challenges in Q1. The record-high gold prices led to a decline in demand for gold jewelry on a volume basis, despite an increase in consumer spending in value terms. The impact of higher prices and concerns over incomes due to economic uncertainties weighed on jewelry demand in the first quarter. On the supply side, primary production of gold saw a slight increase in Q1, setting a record for the quarter. The high producer margins and healthy output have supported the supply chain. Recycling of gold, typically influenced by price increases, saw a decline in Q1, potentially driven by a lack of willingness among consumers to sell back their gold holdings in the current uncertain environment. Gold's safe haven status has led some individuals to hold onto their gold as a way to protect their wealth during times of crisis. Looking ahead, uncertainties surrounding policies, trade deals, and economic outlook are expected to persist, potentially supporting gold's momentum into Q2. The ongoing geopolitical and economic challenges are likely to favor gold as an investment asset, with the potential for continued positive performance in the sector. While opportunities for the gold sector exist, including diversification benefits, policy changes and strategic shifts may take time to materialize and impact the market. The state of flux in the market calls for a watchful eye on how gold could contribute to investment portfolios and navigate the evolving market landscape.