Introduction to Gold in 2025
A chaotic global economic environment pushed gold to the forefront during the first quarter of 2025. The yellow metal set multiple new all-time highs during the period, and the World Gold Council’s (WGC) latest report on gold demand shows its average Q1 price came in at US$2,860 per ounce.
Factors Influencing Gold Demand
This action came as investors sought safe-haven assets on the back of widespread uncertainty. Speaking to the Investing News Network ahead of the report’s release, Joe Cavatoni, senior market strategist, Americas, at the WGC, said gold’s unprecedented rise remains supported by strong fundamentals in the sector. "We’ve seen record-setting prices, and we’ve seen a pace that we’ve never seen before in terms of reaching those record-setting levels," he commented.
Best Q1 for Gold Demand Since 2016
Digging into Q1 gold demand, the WGC highlights a 1 percent year-on-year increase to 1,206 MT, the highest for a first quarter since 2016. In value terms, the amount was close to the previous quarter’s record of US$111 billion. Total investment demand more than doubled, rising 170 percent year-on-year to come in at 551.9 metric tons (MT).
Investment Demand and ETFs
The main driver was an influx of investors into exchange-traded funds (ETF), which recorded inflows of 226.5 MT in Q1, a stunning reversal from the 113 MT of outflows in the year-ago period. Explaining the source of ETF flows, Cavatoni noted that in 2024, China, India, and Japan saw record demand — an interesting trend given that they tend to favor physical gold investment.
Central Bank demand and Physical Gold
Central bank buying experienced a slowdown in Q1, but remained within the range established over the past three years. In total, 244 MT were added to reserves, with Poland, China, Kazakhstan, and the Czech Republic leading. Regarding physical gold, bar and coin demand grew 3 percent year-on-year to 325.4 MT.
Gold Mine Supply Reaches Q1 Record
Year-on-year, the quarter saw a 1 percent increase in gold supply, which rose to 1,206 MT. The gains were marked by a 1 percent increase in mine supply, which rose to 855.7 MT during the quarter compared to 853.4 MT in Q1 2024. This increase set a Q1 record, surpassing the 855 MT produced in 2016.
Gold Demand Outlook for 2025
Looking forward, the WGC expects gold investment demand to build steam amid near-term stagflation and medium-term recession risks, in addition to factors like geopolitical tensions and higher US deficits. Bar and coin demand is seen staying resilient, while central bank buying is expected to stay within the currently established range.
Conclusion
In conclusion, gold had a remarkable first quarter in 2025, driven by strong investment demand and a chaotic global economic environment. As the year progresses, it will be interesting to see how gold demand and supply evolve, particularly in the face of ongoing economic uncertainty and geopolitical tensions. With the WGC expecting gold investment demand to continue to build steam, it’s likely that gold will remain a popular safe-haven asset for investors in the coming months.
