Demand for gold surged due to fresh ETF inflows in 2025
According to a research by an industry association, a resurgence of inflows into gold exchange-traded funds drove an increase in demand for gold in the first quarter of this year. In a new study on gold-demand trends released Wednesday, the World Gold Council reported that the total demand for gold for the first three months of 2025 increased 1% year-over-year to 1,206 metric tons, the highest start to a year since 2016.
In the first quarter, ETF inflows increased to 226 tons. In the fourth quarter of 2025, ETFs experienced inflows of only 18.7 tons and outflows of 113.0 tons the year before. The entire investment demand more than doubled to 552 metric tons as a result of these inflows, which intensified globally. Asian ETF inflows have already exceeded their first-quarter total as of April. Global gold ETF holdings are 10% below their 2020 peak, but there is still opportunity for more expansion.
This reflects growing geopolitical and macroeconomic unpredictability, such as trade tensions between the United States and China and the continued growth of the gold price, which have strengthened gold’s position as a safe-haven asset. In light of the ongoing decline in stocks, Chinese investors in particular are increasingly using exchange-traded funds (ETFs) as a liquid and adaptable substitute, according to Louise Street, senior market analyst at the WGC. According to the WGC, given the dangers of near-term stagflation, medium-term recession, high stock-bond correlations, the expansion of the U.S. deficit, and ongoing geopolitical concerns, investment demand should continue to pick up speed in the future.
Trade unrest, erratic U.S. policy announcements, ongoing geopolitical tensions, and growing recessionary concerns have all contributed to the robust demand for gold. The ensuing demand for safe haven assets contributed to the ongoing surge in gold futures prices, which reached a record high of $3,509.90 per troy ounce on April 22. Gold futures on the New York Mercantile Exchange have increased by almost 26% so far this year.
In other areas, central bank demand decreased to 244 tons of purchases during the first quarter. According to the research, this is still strong and consistent with the quarterly average over the previous three years, despite being 21% lower on an annual basis. Generally speaking, central banks are long-term, strategic buyers who are less susceptible to transient occurrences or price changes. Even if the rate of purchases varies, they should remain a steady, robust source of demand through 2025, barring any structural changes, Street stated.
However, due to rising prices, the demand for gold in jewelry has drastically decreased this year. With global demand down 21% year over year and steep declines in China and India, weakness was evident in all of the major regions. Volumes hit their lowest points since the Covid-19 pandemic in 2020 suppressed demand. However, according to the WGC, consumer expenditure on gold jewelry increased 9% year over year to $35 billion. With the exception of China, all markets had value increase, indicating that customers were willing to stretch their expenditures.
Demand for technology, on the other hand, remained constant year over year at 80 tons as the rise in demand for artificial intelligence was offset by high costs and a fall in demand for wireless, industrial, and decorative applications, as well as dentistry.
