Gold Demand Hits 9-Year High in First Quarter as Investors Flock to ETFs

Global demand for gold reached its highest first-quarter level in nine years, according to a report from the World Gold Council (WGC).

Totaling 1,206 tonnes in the first three months of 2025, demand saw a 1% increase year-on-year, the strongest showing since 2016. This surge was largely driven by a dramatic 170% increase in investment flowing into gold-backed Exchange Traded Funds (ETFs) and continued net purchases by central banks across the globe.

The WGC report highlighted that overall investment demand for gold, encompassing both ETFs and over-the-counter (OTC) transactions, reached 552 tonnes – a substantial 170% rise compared to the same period last year and the highest since the first quarter of 2022.

The resurgence in popularity of gold ETFs was particularly notable, occurring amidst concerns surrounding potential US tax changes, volatility in stock markets, and a weakening trend in the value of the US dollar.

Central banks continued their trend of significant gold accumulation, with net purchases amounting to 244 tonnes in the quarter. While slightly down from the previous quarter, this figure remains in line with the average of the past three years, underscoring the ongoing faith in gold as a reliable safe-haven asset in the face of global geopolitical uncertainty.
 

Demand for physical gold in the form of "bars and coins" also showed strength, reaching 325 tonnes, which is 15% above the five-year quarterly average. China emerged as the key market propelling this growth, registering its second-highest level of retail investment on record.

The technology sector maintained a stable demand for gold at 80 tonnes, supported by the increasing use of AI technology driving demand within the electronics industry. However, potential headwinds from trade tariff uncertainties could present challenges in the latter half of the year.

Conversely, the appetite for gold jewellery experienced a significant downturn as record-breaking gold prices deterred buyers, leading to trading volumes hitting their lowest point since the initial stages of the COVID-19 pandemic in 2020. 

Despite this drop in volume, the value of consumer spending on jewellery still saw a 9% increase, reaching US$35 billion.

The average gold price during the quarter (LBMA afternoon price) stood at US$2,860 per ounce, marking a substantial 38% increase compared to the previous year.
 

Gold prices also reached multiple new record highs in early 2025. Consequently, the total value of global gold demand in the first quarter nearly reached a new peak of US$111 billion, directly influenced by the soaring price of the precious metal.

On the supply side, global gold supply saw a modest 1% increase to 1,206 tonnes. Mine production reached a new quarterly record of 856 tonnes, while gold recycling saw a slight 1% decrease as consumers appeared reluctant to sell, anticipating further price rises.