On Tuesday, gold prices soared to a historic $3,532 per troy ounce, marking a rally with over a 90% increase since late 2022. This surge is expected to continue due to several factors. Key drivers include central bank purchases and strong investment demand, as seen in the influx into gold-backed exchange-traded funds. These are influenced by US President Donald Trump’s disruptions to Western security policies, trade conflicts, and concerns about the US Federal Reserve’s independence.
Will central banks continue purchasing more gold?
According to Metals Focus, annual net gold purchases by central banks have surpassed 1,000 metric tonnes annually since 2022, with a forecast of 900 tonnes this year—double the 2016-2021 annual average of 457 tonnes. Developing nations are diversifying from the dollar after Western sanctions froze about half of Russia’s foreign currency reserves in 2022. The World Gold Council notes that only 34% of the 2024 anticipated central bank gold demand is reported to the International Monetary Fund.
In 2022-2025, central banks contributed 23% to total gold demand, doubling the average share of the 2010s.
Will the decline in the jewellery sector persist?
Jewellery demand, the primary source of physical gold demand, dropped 14% to 341 tonnes in Q2 2025, the lowest since the pandemic-ridden Q3 2020, due to high prices deterring buyers, per the WGC. The largest markets, China and India, saw their combined share dip below 50% for only the third time in five years. Metals Focus reported a 9% drop in gold jewellery fabrication to 2,011 tonnes in 2024, predicting a 16% decline this year.
Are small gold bars and coins still popular?
While there has been a significant shift in retail investment preferences, total sector purchases remain strong. Gold bar investment rose 10% in 2024, though coin purchases fell 31%, according to the WGC. This trend persists in 2025.
Metals Focus predicts a 2% increase in net physical investment this year to 1,218 tonnes, with strong demand in Asia driven by positive price expectations.
Will gold ETFs see more inflows?
Gold ETFs have become a more significant demand source this year, with a 397-tonne inflow from January to June, marking the largest first-half inflow since 2020, as per the WGC.
By the end of June, gold ETF holdings reached 3,615.9 tonnes, the highest since August 2022. The record was 3,915 tonnes five years ago. Metals Focus forecasts a net investment in ETPs of 500 tonnes in 2025 following a seven-tonne outflow in 2024.
