The World Gold Council (WGC) has released its latest quarterly report, revealing a significant 15% year-over-year increase in global gold demand during the first quarter of 2025. This surge comes amid persistent economic uncertainties and growing inflation concerns across major economies.
Record-Breaking Quarter
According to the WGC's Gold Demand Trends report, total gold demand reached 1,276 tonnes in Q1 2025, compared to 1,107 tonnes in the same period last year. This marks the strongest first quarter for gold demand since the council began tracking global data in 2010.
"What we're witnessing is an extraordinary convergence of demand factors across all major gold market segments," said Jennifer Chang, Chief Market Strategist at the World Gold Council. "From central banks to retail investors, the appetite for gold has intensified significantly."
Investment Demand Leads the Way
Investment demand was the standout performer, surging 28% year-over-year to 428 tonnes. This category includes gold bars and coins, as well as inflows into gold-backed ETFs. Gold ETFs specifically saw inflows of 185 tonnes during the quarter, reversing the outflow trend observed throughout much of 2024.
"The renewed interest in gold ETFs is particularly noteworthy," explained Chang. "After several quarters of outflows, investors are returning to gold as a portfolio diversifier and inflation hedge. This shift coincides with growing concerns about equity market valuations and the sustainability of the current economic expansion."
Regional Investment Trends
Regionally, North American investors led the charge, accounting for approximately 40% of global ETF inflows. European demand was also robust, contributing 35% of inflows, while Asian markets accounted for 20%. The remaining 5% came from diverse markets including Australia and the Middle East.
Bar and coin demand showed strength across all major markets, with particularly strong growth in China (+32%), India (+18%), and the United States (+24%). German demand for physical gold also remained elevated, continuing a trend that began in late 2023.
Central Bank Purchasing Remains Strong
Central banks added 175 tonnes to their gold reserves in Q1 2025, marking the 13th consecutive quarter of net purchases. While this represents a slight decrease from the exceptional 190 tonnes added in Q4 2024, it remains well above the five-year quarterly average of 140 tonnes.
"Central banks continue to view gold as an essential component of their reserve diversification strategies," said Dr. Marcus Wei, Senior Economist at Global Financial Research. "The persistent buying from this sector provides a solid foundation for gold prices, even as other demand categories may fluctuate."
Notable purchasers during the quarter included the People's Bank of China, which added 40 tonnes to its reserves, and the Central Bank of Turkey, which acquired 25 tonnes. Several emerging market central banks also made significant additions, including Brazil, India, and Kazakhstan.
Jewelry Demand Shows Resilience
Despite higher gold prices, jewelry demand showed remarkable resilience, increasing by 7% year-over-year to reach 478 tonnes. This performance defied expectations, as jewelry demand typically exhibits price sensitivity.
"The strength in jewelry demand despite elevated prices suggests that consumers are increasingly viewing gold jewelry as both an adornment and an investment," noted Chang. "This is particularly evident in markets like India and China, where cultural affinity for gold is being reinforced by economic considerations."
Chinese jewelry demand grew by 10% year-over-year, reaching 178 tonnes, while Indian demand increased by 6% to 140 tonnes. Middle Eastern markets also showed strength, with combined demand from the UAE, Saudi Arabia, and Egypt rising 12% to 70 tonnes.
Technology Sector Demand
Gold used in technology applications increased by 3% year-over-year to 77 tonnes. This modest growth was primarily driven by the electronics sector, where gold's reliability and conductivity properties remain essential for high-end devices and components.
"The growth in technology demand reflects the ongoing recovery in consumer electronics and the expansion of applications in areas like electric vehicles and renewable energy infrastructure," said Dr. Wei. "While this sector represents a smaller portion of overall gold demand, it provides an important baseline of consistent consumption."
Supply Constraints
Total gold supply increased by just 2% year-over-year to 1,165 tonnes, creating a supply-demand deficit that has contributed to price strength. Mine production was essentially flat at 856 tonnes, while recycled gold supply increased by 8% to 309 tonnes in response to higher prices.
"The gold mining industry continues to face challenges including rising production costs, regulatory hurdles, and the depletion of easily accessible reserves," explained Chang. "These supply constraints, combined with robust demand, create a favorable backdrop for gold prices in the medium term."
Market Outlook
The World Gold Council maintains a positive outlook for gold demand through the remainder of 2025, citing several supportive factors:
- Anticipated interest rate cuts by major central banks, reducing the opportunity cost of holding gold
- Persistent inflation concerns in key economies
- Ongoing geopolitical tensions that enhance gold's appeal as a safe-haven asset
- Continued central bank diversification away from traditional reserve currencies
- Growing recognition of gold's role in portfolio diversification among institutional investors
"While we expect some volatility in the near term, the fundamental drivers of gold demand remain firmly in place," concluded Chang. "The combination of investment demand, central bank buying, and resilient consumer markets creates a robust demand profile that is likely to support gold prices throughout 2025."
Price Implications
Gold prices have already responded to the strong demand environment, trading near $2,450 per ounce as of early May, up approximately 8% since the beginning of the year. Analysts at several major financial institutions have revised their year-end price targets upward following the release of the WGC report.
"The Q1 demand figures confirm what price action has been suggesting—that gold is in a structural bull market," said Dr. Wei. "With demand outpacing supply and macroeconomic conditions remaining supportive, we see potential for gold to test the $2,700-$2,800 range before year-end, with further upside possible if inflation proves more persistent than currently expected."
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