The World Gold Council published its Q2/2025 Gold Demand Trends report on July 30, 2025. The total gold demand was 1,249 tonnes, a 3% increase over the previous year, another positive development in the industry. However, as in the last quarter, the actual narrative is in the changing structure of demand.

ETFs and Investment Still Ahead

Demand growth was still driven by investment. In Q2/2025, exchange-traded funds (ETFs) added 170 tonnes, after robust flows in April and June. This continued increase took H1/2025 ETF inflows to 397 tonnes, the highest half-year since 2020.

Bar and coin investors were not left behind. Bar and coin demand was 307 tonnes in Q2/2025, a 11% increase over the previous year and above the five-year average.

The momentum was due to the continued uncertainty in the market caused by fluctuating U.S. trade policy, geopolitical tensions, and a surging gold price. The average price of gold increased to $3,280 an ounce in Q2/2025, 40% higher than the year before and 15% higher than the prior quarter.

China was again at the forefront of bar and coin demand, with safe-haven purchases, few other investment options, and positive signals by the People's Bank of China. Chinese bar and coin demand reached 115 tonnes in Q2/2025, an increase of 44% over the year. In India, the demand increased in the eighth consecutive quarter by 7%.

Central Banks: Continued to Buy, but at a Slower Pace

Central banks added 166 tonnes to official reserves in Q2/2025, which is still a significant component of global demand but at a slower rate, declining by 21% year-over-year. It is the lowest level since Q2/2022, but it is still above the long-term average.

Poland remained the biggest buyer (19 tonnes), followed by Azerbaijan, Turkey, Kazakhstan, and China. The slower pace is probably due to the proximity of target allocations and the high price of gold.

However, the general diversification trend out of U.S. assets continues. According to the latest survey by the World Gold Council, 95% of central banks believe that global reserves will continue to increase in the coming year.

FIGURE 1: Gold Demand by Sector ? H1/2025

Jewellery: Volumes Crash, Spending Rises

Gold jewellery demand posted double-digit losses in the quarter. Consumption fell 14% year-over-year in Q2/2025 to 341 tonnes, the lowest since the pandemic struck in 2020.

The traditional leaders (India and China) were hit by high prices, with demand declining by 17% and 20% respectively. Their combined market share dropped to less than 50%, only the third time in five years.

However, dollar-based total jewellery expenditure increased 21% annually to $36 billion, indicating that consumers are spending more on less gold. Lightweight products are on the rise. In India, 18k plain gold and gold-plated silver were more acceptable amid affordability concerns. The price-consumption gap increased in most areas.

The only exception was Iran, where the demand for gold jewellery increased by 12% as people shifted to gold due to local inflation and instability.

Tech Sector: Tariff Tensions Take a Toll on Demand

Technological consumption of gold dropped 2% annually to 79 tonnes, and electronics consumption also fell. Although there was some support due to high demand in AI-related applications, tariff threats and export restrictions reduced demand across Asia.

Manufacturers placed orders in advance of possible tariffs, but total gold consumption in electronics and industry applications declined.

Supply: Mining Boom, Recycling Slump

On the supply side, the total mine output was 1,249 tonnes, a new Q2 record, and mine production increased 1% year-over-year to 909 tonnes. Expansion was driven by Brazil, Ghana, Uzbekistan, and Canada ramp-ups.

Recycling increased only slightly, by 347 tonnes (+4% y/y), the best Q2 result since 2011. Uncharacteristically subdued given the record gold price.

Hedging fell further, and a sixth consecutive quarter of de-hedging occurred as miners wanted to be fully exposed to spot gold prices.

Around the World

• China: Investment demand outpaced jewellery demand as consumers tried to protect themselves against economic uncertainty and declining property prices. Retailers merged, reducing entry points, but possibly making the industry stronger.

• India: Consumers were swapping old jewellery with new or using it as collateral as prices soared past historic levels. The mixed results were experienced in festivals and large retailers, but the trend towards lightweight and lower-carat is apparent.

• Middle East/Turkey: Political unrest and inflation, coupled with high prices, suppressed the markets. The only exception was Iran, where investment and jewellery demand were increasing.

• US & Europe: The U.S. experienced sharp demand declines for bars and coins (8.8 tonnes, down 53% y/y and the lowest since Q4/19), whereas the investment in Europe more than doubled, led by German buyers seeking safe-haven assets. Jewellery consumption was down across the board, but spending rose in total dollar terms.

What's Next?

Investment demand is expected to remain strong going into the second half of 2025 and ETFs still have upside potential. The jewellery market could likely experience continued weak sales due to higher prices and weaker economies in most regions; seasonality can provide some boost, but overall demand is likely to be low in the full year. Gold demand in technology could remain price- and trade-policy-constrained, although AI could partially offset it.

Mine supply is expected to hit another record annual supply due to healthy margins and new projects. Recycling should increase slowly, with monetisation and the use of gold as collateral, but is somewhat restrained by positive price sentiment and low distress selling.

With the second half of the year underway, the divide between strong investment and poor consumer demand is widening, and supply is reacting to margin incentives and geopolitical uncertainty is setting the trends in the months to come.

FIGURE 2: Quarterly Gold Supply and Demand by Sector (Tonnes)

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