Gold demand surged to 1,249 tonnes in Q2 2025, up 3% year-on-year, with the value of demand hitting a record $132 billion, a 45% jump, according to the World Gold Council. The rally was powered by robust inflows into gold-backed ETFs, continued bar and coin investment, and steady, if slower, central bank buying.
The LBMA Gold Price averaged $3,280/oz in the quarter, up 40% year-on-year and 15% quarter-on-quarter, setting a new all-time high in June.
Investment Surge
Global investment demand soared 78% year-on-year to 477 tonnes, led by 170 tonnes of ETF inflows.
- China was the standout, with bar and coin demand jumping 44% to 115 tonnes, the strongest H1 since 2013.
- Europe more than doubled its bar and coin demand to 28 tonnes, while U.S. demand slumped to 9 tonnes amid profit-taking and tariff-related disruptions.
OTC investment and stock changes added 170 tonnes, reflecting ongoing interest from institutional and high-net-worth investors seeking a hedge against trade tensions, dollar weakness, and geopolitical risk.
Jewellery Retreats to Pandemic Lows
Jewellery demand volumes sank 14% year-on-year to 341 tonnes, approaching levels last seen during the 2020 pandemic, as record prices hit affordability:
- India fell 17% to 89 tonnes as local prices breached ₹100,000/10g.
- China dropped 20% to 69 tonnes, marking the fifth straight quarterly double-digit decline.
Despite the volume slump, jewellery spending rose 21% to $36 billion, underscoring the sharp decoupling between value and tonnage.
Central Bank Buying Moderates
Central banks bought 166 tonnes in Q2, down 33% from Q1 and 21% year-on-year. Poland led purchases with 19 tonnes, followed by Azerbaijan (16t) and Kazakhstan (16t).
While the pace has slowed, H1 2025 central bank purchases of 415 tonnes remain well above pre-2020 norms, as de-dollarization and reserve diversification continue.
Supply Hits Record, Recycling Still Muted
Total supply rose 3% year-on-year to 1,249 tonnes, driven by:
- Record Q2 mine production of 909 tonnes (+1% y/y) with notable gains from Brazil, Ghana, Uzbekistan, and Canada.
- Recycling up 4% to 347 tonnes, though still subdued relative to the historic 2011–2012 peaks.
Miners continued to de-hedge, with the global hedgebook shrinking by 7 tonnes in Q2, reflecting confidence in high spot prices.
Outlook
The WGC sees continued investment inflows in H2, supported by:
- Lower expected U.S. interest rates from September
- Ongoing geopolitical volatility
- Structural weakness in the U.S. dollar
Jewellery demand is likely to remain weak, with Asia’s consumers slow to adapt to record prices. Meanwhile, strong producer margins are expected to keep mine output near record highs in 2025, even as recycling rises modestly.