What Caused a 170% Surge in Global Gold Investment During January-March?
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Synopsis
The first quarter of 2025 saw a remarkable surge in global gold investment demand, rising by 170% compared to last year, largely fueled by increased inflows into gold ETFs. This trend reflects the growing interest in gold as a safe haven amidst global economic uncertainties.
Key Takeaways
- Gold investment demand surged by 170% in Q1 2025.
- Gold ETF inflows were a significant driver of this increase.
- Central banks added 244 tonnes to their gold reserves.
- Jewellery demand in India declined by 25% in volume.
- The total gold supply reached 1,206 tonnes in Q1 2025.
New Delhi, May 30 (NationPress) The demand for gold investment experienced a remarkable 170 percent increase (year-on-year) in the January-March quarter, catalyzed by a robust revival in gold ETF inflows, especially in India, Europe, and Asia, according to a report released on Friday.
The ‘May Alpha Strategist Report’ by Motilal Oswal Private Wealth indicates that Q1 2025 marked a historic upturn in the gold market, with prices reaching all-time highs amidst rising geopolitical tensions, tariff conflicts, and a weakening US dollar.
The overall supply saw a slight increase, yet the soaring prices resulted in a substantial boost in market value.
Central banks continued their vigorous purchasing, acquiring an additional 244 tonnes, which underscores their enduring confidence in gold as a strategic reserve asset, particularly among emerging markets.
Conversely, jewellery demand faced a sharp decline due to high prices, with India suffering a 25 percent drop in volume, despite a minor increase in value. This shift in consumer behavior included smaller purchases and exchanges of old jewellery.
The Reserve Bank of India moderated its gold purchases but still augmented its reserves, reflecting a cautious yet strategic approach. Overall, the quarter underscored gold's persistent attractiveness as a safeguard against uncertainty, even as conventional consumption faced challenges.
The first quarter of 2025 showcased a vibrant gold market, characterized by record prices and significant demand shifts across various sectors.
A total of 1,206 tonnes of gold supply was recorded, representing a 1 percent year-on-year increase and the highest for a first quarter since 2016. This modest uptick in demand volumes resulted in an impressive 40 percent rise in value, driven by the escalating price of gold.
Key factors influencing this price surge include tariff conflicts, geopolitical instability, stock market fluctuations, and the weakness of the US dollar.
In India, domestic spot gold prices mirrored this trend, climbing 23 percent to Rs 93,217 per 10 grams.
The investment in gold ETFs significantly propelled the demand for gold during Q1 2025, reaching 552 tonnes, a striking 170 percent year-on-year increase. This level is nearly equivalent to that observed in Q1 2022, following the onset of the Russia-Ukraine conflict. The surge was predominantly fueled by a strong resurgence in gold ETF inflows, achieving the highest quarterly demand in three years.
Global gold-backed ETFs witnessed a growth of 226 tonnes in holdings during the quarter, elevating total holdings to 3,445 tonnes. This increase was driven by trade tensions and favorable gold price dynamics, as investors sought the safety of gold.
The Reserve Bank of India added 0.6 tonnes of gold to its reserves in March, achieving total holdings of a record 879.6 tonnes, which constitutes 11.7 percent of its total foreign exchange reserves.
Point of View
The significant surge in gold investment during the first quarter of 2025 illustrates the enduring appeal of gold as a safe-haven asset amid global uncertainties. The rise in ETF inflows indicates a shift in investor sentiment, prioritizing stability over traditional consumption patterns. This trend reinforces the need for a strategic approach to gold investment in the current economic landscape.
NationPress
26/07/2025
Frequently Asked Questions
What factors contributed to the rise in gold investment demand?
The rise in gold investment demand was primarily driven by increased inflows into gold ETFs, geopolitical tensions, tariff wars, and a weakening US dollar.
How much did the Reserve Bank of India increase its gold reserves?
The Reserve Bank of India added 0.6 tonnes of gold to its reserves in March, bringing total holdings to a record 879.6 tonnes.
What was the impact of gold prices on jewellery demand in India?
High gold prices led to a sharp decline in jewellery demand in India, with a 25 percent drop in volume despite a slight increase in value.
How much gold was supplied in Q1 2025?
In Q1 2025, the total gold supply reached 1,206 tonnes, marking a 1 percent year-on-year increase.
How did ETF inflows affect gold investment in early 2025?
Gold ETF inflows surged, leading to a significant increase in gold investment demand, reaching 552 tonnes, a 170 percent year-on-year increase.
