Gold Demand Soars to Unprecedented Levels in 2025
Gold has maintained its remarkable rally, with prices reaching record highs as investors and central banks increasingly turn to the precious metal as a safe haven asset. This surge comes amid ongoing geopolitical uncertainty and economic volatility that have become defining features of the global landscape.
Record-Breaking Annual Performance
Total gold demand surpassed 5,000 tonnes for the first time in 2025, marking a significant milestone for the precious metals market. Throughout the year, gold established an astonishing 53 new all-time highs, demonstrating its enduring appeal during turbulent times.
Louise Street, senior market analyst at the World Gold Council, commented on this unprecedented demand: "Annual demand last year was at a record high...primarily driven by this massive increase in investment across the board." She attributed this trend to "safe haven and diversification flows in the environment that we're in, very heightened geopolitical risk and instability, dollar weakness and excessive stock market valuations."
Central Bank Activity and Investment Trends
Central bank purchasing remained resilient throughout 2025, with demand increasing by six per cent in the final quarter compared to the previous one, reaching 230 tonnes. However, annual central bank demand totalled 863 tonnes, which fell below the 1,000-tonne levels observed in the preceding three years. This relative moderation reflected central banks' cautious approach amid consistently rapid price rallies and elevated valuations.
Investment demand shattered previous records, reaching a landmark 2,175 tonnes and surpassing the previous annual record of 1,744 tonnes that had stood since 2011. This pushed the total annual value of gold investment to $240 billion as investors poured capital into exchange-traded funds, bars, and coins.
Regional Investment Patterns
Total bar and coin investment demand surged by a third in the fourth quarter to 420 tonnes, while also increasing by a third year-on-year. This generated the highest annual total since 2015, reaching $154 billion, with more than half of this demand originating from India and China, where currency depreciation played a significant role.
Europe reported its fourth consecutive quarter of year-on-year growth, with investor interest fuelled by bullish price expectations and the desire for safe haven assets. Conversely, the United States experienced more modest growth in coins and bars, with investment rising by just eight per cent to $7 billion.
Exchange-Traded Funds and Market Dynamics
Appetite for gold-backed exchange-traded funds continued to expand dramatically, with holdings surging to an all-time high of 4,025 tonnes. Annual inflows reached a record-breaking $89 billion, with more than half of this increase funnelled into North American funds. This trend was driven by fears of an artificial intelligence bubble and equity market volatility, while Asian funds posted the second strongest increase.
Street noted an interesting demographic shift in Japan, where younger investors are entering the gold market: "A lot of older investors in Japan have gold that they bought a long time ago, so typically what we've seen in recent years is when the gold price tends to rise, this gold comes back onto the market as they take profits. But increasingly...we're seeing the young generation come through and they're now much more inclined to buy."
Industrial Demand and Production Outlook
Demand for gold in the technology sector remained steady throughout 2025, with full-year demand reaching 323 tonnes. While demand for artificial intelligence-related electronics provided support, this was tempered by ongoing volatility in traditional consumer electronics markets.
Annual mine production reported a fractional increase, driven by record mine output and higher recycling supply. Africa and Asia experienced the most notable growth, with Ghana posting a substantial 24 per cent year-on-year increase. However, several countries including Argentina and Mexico reported production declines due to operational challenges.
2026 Outlook and Market Expectations
The World Gold Council anticipates that demand will remain elevated throughout 2026, supported by persistent macroeconomic tensions and robust central bank demand motivated by crisis protection strategies. Gold prices have already surpassed $5,000 per ounce in January, indicating continued momentum.
Street elaborated on the outlook: "We've seen quite a few banks come out and announce that they are either thinking or planning to actually continue to increase [their reserves]. With economic and geopolitical instability showing little sign of retreat in 2026, momentum from last year's strong gold demand is likely to persist."
The precious metal's remarkable performance throughout 2025 demonstrates its enduring role as a strategic asset during periods of uncertainty, with both institutional and retail investors continuing to allocate significant resources to gold as they navigate complex global economic conditions.
