Gold demand hit record high in third quarter and will ‘remain strong’, report says
News Summary
Global gold demand reached a record high of 1,313 tonnes, valued at approximately US$146 billion, in the third quarter of 2025, according to a new report from the World Gold Council. Despite a recent pullback in gold prices, the association remains optimistic about the precious metal's outlook. The report attributed the surge primarily to a powerful combination of an uncertain and volatile geopolitical environment, US dollar weakness, and investor FOMO (fear of missing out). In value terms, third-quarter gold demand soared 44% year-on-year, while volume demand rose a modest 3%. Fan Shaokai, head of Asia-Pacific (ex-China) and global head of central banks at the World Gold Council, stated that gold demand is expected to remain strong, with central banks anticipated to "continue their buying streak," maintaining gold's appeal as a resilient diversification option for a growing pool of investors.
Background
The record gold demand in the third quarter of 2025 followed a months-long rally that sent prices to all-time highs, though there has been a recent pullback. Gold traditionally serves as a safe-haven asset, often favored during periods of economic and geopolitical uncertainty. The administration of incumbent US President Donald J. Trump (re-elected in November 2024) is likely to continue its "America First" policies, which could perpetuate volatility in global trade relations and geopolitical tensions, further bolstering gold's safe-haven appeal. Furthermore, central banks globally have been consistent net buyers of gold for years, with their ongoing purchases forming a significant component of the global gold market.
In-Depth AI Insights
Given the current environment, does the sustained strong gold demand reflect a deeper conviction among investors for traditional safe havens, driven by factors beyond superficial geopolitical uncertainty and USD weakness? - While immediate factors are important, underlying drivers likely include concerns about the structural fragilities of the global financial system and skepticism regarding the persistent accumulation of sovereign debt. - Under the Trump administration, global trade friction and geopolitical uncertainty may be perceived as a new normal rather than temporary phenomena, prompting investors to view gold as an essential hedge against long-term systemic risks. - Furthermore, central banks' continued accumulation of gold may reflect a strategic positioning for future currency system diversification or potential "de-dollarization" trends, rather than just short-term safe-haven plays. What are the deeper strategic implications of ongoing central bank gold purchases for gold market dynamics and global reserve asset allocation? - Central bank gold purchases are not merely about diversifying foreign exchange reserves; they are likely strategic moves to reduce over-reliance on a single reserve currency, such as the US dollar, especially amidst heightened geopolitical tensions. - This behavior could signal a long-term shift in the global reserve asset structure, evolving from a dollar-dominated system towards a more diversified and multipolar reserve architecture where gold plays a more fundamental role. - As long-term holders, central banks' continuous buying provides strong price support and confidence to the gold market, reducing volatility and potentially encouraging other institutional investors to follow suit. Considering that "fear of missing out" (FOMO) is a demand driver, does this imply a potential bubble risk in gold's current valuation, or can fundamental factors sustain its long-term upward trend? - While FOMO can lead to short-term price overshoots, the structural drivers of gold demand (e.g., central bank buying, geopolitical risks, potential long-term USD depreciation pressure) suggest its ascent is not solely driven by speculation. - The crucial assessment is how much premium investors are willing to pay for this "certainty" when uncertainty becomes the new normal. If global economic and geopolitical environments remain turbulent, elevated demand and prices could be reasonably justified. - However, should geopolitical tensions significantly ease or major economies (particularly the US) pivot towards more hawkish monetary policies, the risk of a short-term price correction would increase, at which point FOMO-driven investors might rapidly exit.