Gold’s Radiant Quarter: Investment Demand Drives the Market to New Heights

The third quarter of 2025 was nothing short of remarkable for the global gold market. According to data from the World Gold Council, total demand for gold—including over-the-counter (OTC) transactions—rose by 3% year-on-year to reach 1,313 tonnes, the highest quarterly level ever recorded. However, the true scale of this surge is better captured in value terms: gold demand soared by 44%, reaching 146 billion dollars in Q3 alone. Cumulatively for the first nine months of 2025, gold demand is up 1% to 3,717 tonnes, while in monetary terms, this represents a staggering 384 billion dollars, up 41% compared to the same period in 2024.

This impressive growth was led by investors, who took centre stage during the quarter. Fueled by geopolitical uncertainty, macroeconomic volatility, and shifting monetary policies, investment-related gold demand surged to historic levels. Gold-backed ETFs saw net inflows of 222 tonnes, while demand for bars and coins exceeded 300 tonnes for the fourth consecutive quarter—a milestone not reached since 2013. Central banks also played a vital role, purchasing 220 tonnes, a 28% increase from the previous quarter, though still slightly slower than the record pace observed in 2022–2023.

In contrast, the jewellery sector remained under pressure. Despite a 13% year-on-year increase in value to 41 billion dollars, jewellery consumption fell for the sixth straight quarter, dropping by 10% to 371 tonnes—a reflection of the challenges posed by persistently high gold prices. Technological demand for gold also softened slightly in Q3 due to a combination of rising prices and ongoing trade tensions between the U.S. and China, though the broader AI boom continued to provide some support.

Bar and Coin Demand: The Strongest Signal from Individual Investors

Nowhere is gold’s resurgence more evident than in the market for physical investment—bars and coins. Data from the World Gold Council shows that global demand for these products stayed above 300 tonnes for the fourth quarter in a row, echoing levels not seen since the gold bull run of 2013. This reflects both the growing investor appetite for tangible assets in uncertain times and a behavioural shift toward safe-haven strategies.

In China, bar and coin demand in Q3 remained firmly aligned with its five-year quarterly average, reaching 313 tonnes year-to-date—just 23 tonnes shy of the country’s total for 2024. While investor activity was muted during July and August due to strong local equity performance, momentum picked up sharply in September as gold prices surged and confidence was buoyed by ongoing central bank purchases.

India also recorded a powerful quarter, with bar and coin demand reaching 184 tonnes for the year to date—the highest since 2013. The weakening rupee amplified domestic price gains, sparking a wave of investor interest. Investment value exceeded 10 billion dollars, setting a new quarterly record, 56% above the previous high. This buying frenzy even caused domestic gold prices to trade at a premium over international levels, as some jewellery buyers turned to investment-grade gold products.

The Middle East followed a similar trajectory: slow summer months gave way to a September rally. In Turkey, although overall demand was up compared to a weak 2024 base, high interest rates on lira deposits kept investors cautious. Nevertheless, premiums rose above 100 dollars per ounce in late Q3 and early Q4, signaling a resurgence in local demand. In Iran, political and currency instability sparked safe-haven buying early in the quarter, but runaway domestic prices eventually stifled broader investor participation.

In the United States, Q3 marked a low point for net investment in gold bars and coins—just 7 tonnes, the weakest since pre-COVID 2017–2019 levels. However, this figure belied strong two-way market activity, with heavy profit-taking balanced by renewed buying as gold breached new highs. Importantly, U.S. investors responded positively in September to news that gold bars would remain exempt from tariffs, and this trend intensified in early October.

Across Europe, retail gold investment accelerated sharply, especially in Germany and the UK, where the breach of the $4,000/oz threshold in September and October sparked renewed enthusiasm. Similarly, ASEAN countries showed robust double-digit growth. Thailand recorded its best quarter since early 2019, Indonesia reached a 12-year high, and even in Vietnam, where demand was slightly down, long queues and state-imposed purchase limits suggested high underlying interest.

The surge continued across the rest of Asia-Pacific. In Japan, investors snapped up gold as it crossed ¥20,000 per gram, leading to shortages in retail shops. In South Korea, year-to-date demand reached a record 18 tonnes. Australia also joined the trend, with Q3 seeing long lines outside bullion dealers and many shops running out of stock, especially as expectations of continued price growth intensified.

Forecasts and Outlook: A Market Shaped by Uncertainty and Central Banks

According to the World Bank, gold prices are projected to rise by 42% in 2025 compared to the previous year, a performance not seen since the extraordinary run-up of 1979–80. However, while both rallies were fueled by geopolitical stress and a weakening dollar, today's surge is marked by a unique feature: unprecedented central bank buying, which has more than doubled since 2022 relative to the 2015–2019 average.

Looking ahead, gold is expected to gain a more moderate 5% in 2026, supported by continued (though slowing) central bank demand and expectations of further U.S. monetary easing. By 2027, a slight 6% decline is projected, largely due to a normalization of ETF flows. Still, even then, gold prices are likely to remain more than 180% higher than the 2015–2019 average, indicating a lasting structural shift in how gold is perceived and used in portfolios.

In summary, Q3 2025 has shown that the current gold rally is being propelled not just by fear or speculation, but by broad-based, globally distributed demand—particularly from retail investors seeking stability. With central banks continuing to support the market and geopolitical tensions unlikely to abate soon, gold seems poised to retain its shine well into the coming year.