Investment Flows and ETF Inflows Drive Growth

Investment demand was the principal driver of the quarterly gain. In particular, gold ETF inflows surged, helping total investment demand jump 170% to 552 tonnes—the strongest level since Q1 2022. This sharp rise in investment activity reflects renewed appetite for gold as a portfolio asset, as investors sought exposure to the metal through exchange-traded funds alongside other investment vehicles.

Central Bank Buying Remains a Key Support

Official sector purchases remained notable, with central banks adding 244 tonnes of gold to their reserves during the quarter. Continued accumulation by central banks has been a persistent support for the market, providing steady, strategic demand as institutions diversify reserves and manage geopolitical and economic risks.

Retail Demand: Bars and Coins Stay Elevated, Led by China

Retail demand for physical gold, especially in the form of bars and coins, stayed high at 325 tonnes—about 15% above the five-year average. Much of this strength was concentrated in China, where individual investors continued to favor physical holdings. Elevated bar and coin purchases illustrate ongoing consumer confidence in gold as a store of value and a liquid asset during periods of market uncertainty.

Technology and Industrial Use

Demand from the technology sector held steady at 80 tonnes. While growth in areas such as artificial intelligence has supported some component demand for precious metals, the sector also faces pressures from shifting trade policies and potential tariff-related uncertainties. As a result, technology demand for gold remained stable rather than expanding significantly in the quarter.

Jewelry Demand Falls While Value Spends Rise

Record-high gold prices led to a notable drop in jewelry demand, which fell to its lowest level since the COVID-19 shutdowns in 2020. Despite the lower volume of jewelry sold, the total value of consumer spending on jewelry increased by 9%, reaching US$35 billion. This divergence indicates that higher prices compressed physical volumes even as consumers spent more in monetary terms to purchase gold jewelry.

Market Implications and Outlook

The combination of elevated ETF inflows, strong retail purchases, and persistent central bank buying created a supportive backdrop for gold prices in Q1 2025. Investment-driven demand accounted for a substantial portion of the quarterly increase, while physical demand from consumers and central banks provided a more stable foundation. At the same time, reduced jewelry volumes highlight sensitivity to price, as consumers adjust purchasing behavior when gold trades at elevated levels.

Looking ahead, market participants will likely monitor ETF activity, central bank policies, and consumer demand patterns closely. Tariff developments and broader macroeconomic trends could influence technology sector usage and retail buying, while price movements will continue to shape jewelry consumption. Together, these factors will determine whether the momentum seen in the first quarter persists throughout the year.