Onome Amuge
Global gold demand hit its highest level in modern records in the third quarter of 2025, driven by a wave of institutional buying and renewed enthusiasm for exchange-traded funds, reflecting the metal’s transformation from a traditional safe-haven asset into a core pillar of global financial portfolios.
Total global gold demand, including over-the-counter (OTC) trades, climbed 3 per cent year-on-year to 1,313 tonnes in the three months to September, according to the World Gold Council. In value terms, however, the increase was far more pronounced, with the total worth of demand soaring 44 per cent to a record $146 billion, driven by surging prices and renewed investor appetite amid heightened geopolitical and market uncertainty.
Year-to-date demand now stands at 3,717 tonnes, up 1 per cent from a year ago, but the value of those purchases ($384 billion) has jumped by over 40 per cent. The figures underscore how gold, long seen as a defensive asset, is increasingly viewed as an active financial instrument in a world grappling with inflation volatility, weakening currencies, and diverging monetary policies.
Investment activity dominated the quarter. Gold-backed exchange-traded funds (ETFs) recorded inflows of 222 tonnes, while bar and coin demand exceeded 300 tonnes for the fourth consecutive quarter, reaching 316 tonnes. Together, these two segments accounted for more than half of global demand, driven by renewed risk aversion in both advanced and emerging markets.
In contrast, traditional jewellery consumption, which is historically the backbone of gold demand, continued to falter. Jewellery use fell for the sixth consecutive quarter, dropping 19 per cent year-on-year to 371 tonnes, as record-high prices curbed buying across India, China, and the Middle East. Yet, in value terms, jewellery sales still rose 13 per cent to $41 billion, highlighting gold’s resilience as a luxury and cultural asset even in high-price environments.
Technology demand, which accounts for less than 10 per cent of total consumption, edged slightly lower as trade frictions and US tariffs dampened electronics output. However, growing demand from artificial intelligence (AI) infrastructure, which uses gold in chip manufacturing and data centre components, helped cushion the decline.
Gold buying by central banks gathered pace in the third quarter, rising 28 per cent from the previous three months to 220 tonnes, according to the World Gold Council. While momentum remains strong, total purchases of 634 tonnes year-to-date are below the 724 tonnes accumulated in the same period of 2024.
The steady build-up reflects a continued diversification away from the US dollar, particularly among emerging-market central banks such as China, India, and Turkey. Analysts note that persistent geopolitical fragmentation, including rising sanctions risk and currency volatility, has reinforced gold’s appeal as a neutral reserve asset.
The increase in demand coincided with a series of record-breaking prices. The London Bullion Market Association (LBMA) benchmark price hit 13 new all-time highs during the quarter, averaging $3,456.54 per ounce, a 40 per cent increase year-on-year and up 5 per cent from the previous quarter. The price has risen 16 per cent since July, fuelled by safe-haven demand, lower real yields, and ongoing uncertainty over the pace of global monetary easing.
Gold supply, meanwhile, also reached a new quarterly record of 1,313 tonnes, up 3 per cent from a year earlier. Mine production rose 2 per cent to 977 tonnes, consistent with seasonal increases in the third quarter, while recycled supply climbed 6 per cent to 344 tonnes as higher prices encouraged selling of old jewellery and investment products.
Yet recycling activity remained restrained, according to the report, as expectations of further price appreciation kept many holders on the sidelines.
One of the most striking developments in 2025 is gold’s accelerating financialisation. Over-the-counter (OTC) investment (Trades between institutions and high-net-worth investors outside formal exchanges), added 55 tonnes in the quarter, driven by robust buying in September.
This shift has been amplified by macroeconomic headwinds. With global bond yields retreating, equity markets volatile, and cryptocurrencies struggling to regain credibility, gold has re-emerged as the preferred hedge against systemic risk.
Analysts remain divided on whether gold’s rally is sustainable. Some argue that a prolonged high-interest-rate environment could limit further gains, while others believe continued central bank buying and AI-linked industrial demand could push prices to new highs in 2026.
For now, the combination of resilient investment flows, steady central bank purchases, and constrained supply has turned gold into one of 2025’s most powerful financial stories; not merely a barometer of fear, but a defining asset class of the post-pandemic economy.
