World Gold Council: Global gold demand reached a record high in the first quarter, trade tensions sparked a surge in ETF investments

Tariff policies boost the trend of risk aversion, global gold demand in the first quarter reaches a historic high, and ETF inflows surge, driving gold prices to soar.

According to the latest data from the World Gold Council (WGC), the total gold demand in the first quarter increased by 1% year-on-year, reaching 1,206 tons, marking the highest level for the first quarter since 2016. This drove total investment demand to grow to 552 tons, a year-on-year increase of 170%, the highest level since the first quarter of 2022.

Among them, the demand for gold bars and coins remained high, reaching 325 tons, which is 15% higher than the five-year quarterly average.

The report also shows that in the first quarter of 2025, gold-backed ETFs experienced the largest net inflow of funds since 2022, amounting to 227 tons of gold—these funds drove gold prices up by 19% during this period, reaching a historic high of $3,500 per ounce on April 22.

WGC Senior Market Strategist John Reade stated:

“The key factor missing from the continuously rising prices has been Western demand for gold. Now, through ETFs, we have gained this factor. We are beginning to see improvements in European demand for gold bars and coins, but the U.S. has not yet shown this.”

The strong performance of gold ETFs is particularly noteworthy, as these products have experienced continuous outflows over the past four years despite rising gold prices. This indicates that Western investors are once again viewing gold as a key safe-haven asset.

Analysis points out that the expansion of the U.S.-led trade war seems to be the main catalyst attracting Western investors back to the gold market, as investors seek safe-haven assets in response to poor performance in the U.S. stock market and a precarious fiscal outlook.

Strong Gold Investment Demand, Weakening Jewelry Consumption

The report shows that although investment demand has increased, jewelry demand has fallen to its lowest level in five years, as high prices have forced consumers to reduce purchases or opt for lighter-weight items.

For example, the gold ETF inflow in the Chinese market in the first quarter was approximately 16.7 billion yuan (about $2.3 billion, equivalent to 23 tons), setting a historical high. The surge in gold prices and unprecedented inflow have driven the total assets under management (AUM) and total holdings of gold ETFs to both break historical records, reaching 101 billion yuan (about $13.9 billion) and 138 tons, respectively.

Meanwhile, statistics show that the total gold consumption demand in the Chinese market (including gold bars, coins, and jewelry) in the first quarter was 249 tons, a year-on-year decline of 15%, mainly due to weak demand for gold jewelry.

Looking ahead, the World Gold Council believes that high gold prices and seasonally weak demand may put pressure on gold jewelry consumption demand in the Chinese market in the second quarter, but gold's dual attributes as both jewelry and investment are expected to provide some support for its overall demand. Additionally, gold investment demand may remain strong in the second quarter, as factors such as trade frictions and investors' expectations of interest rate declines may further enhance gold's appeal In addition, the entry of Chinese insurance funds is expected to provide long-term support for domestic physical gold demand.

Central Bank Gold Purchases Slightly Slowed, But Remain High

Large-scale purchases by central banks have been one of the most important driving factors for the rise in gold prices.

The report shows that global central banks purchased 244 tons of gold in the first quarter, a decrease of one-fifth compared to the same period last year, but the purchase volume is expected to remain at the high levels of the past three years.

In addition, technical demand remained at 80 tons, unchanged year-on-year. The report indicates that the continued adoption of AI has driven sustained growth in the electronics industry, but the uncertainty of tariffs has made the environment for the remainder of this year challenging.

As trade tensions continue, global economic growth prospects remain weak, and geopolitical risks rise, investors may continue to flock to gold as a traditional safe-haven asset, driving its price further up