Gold demand in 2025 is expected to stay healthy: WGC

The world's demand for gold reached an all-time high in 2024, driven by robust central bank purchases and increased investment demand, according to the World Gold Council's annual report.

The report highlighted that overall investment demand is expected to stay healthy in 2025, as lower interest rates are anticipated to reduce the opportunity costs of holding gold. Total gold transactions amounted to 4,974 tons in 2024, up from 4,899 tons in 2023, including over-the-counter (OTC) investments.

The Council noted that central banks' appetite for gold remained "insatiable," achieving a "significant milestone" with purchases exceeding 1,000 tons for the third consecutive year.

The National Bank of Poland led central bank purchases, adding 90 tons to its reserves. Turkey's Central Bank followed closely with a 75-ton increase, while the Reserve Bank of India maintained consistent monthly purchases except in December.

Overall investment in gold climbed 25% to a four-year high of 1,180 tons, largely fueled by gold exchange-traded funds. Demand for gold bars and coins also remained strong, particularly in China and India.

The report highlighted that the Chinese investors faced limited alternative investment options, driven by domestic economic uncertainty, equity market volatility, and record-low government bond yields.

In India, gold demand received a boost after the government reduced gold import duties from 15% to 6% in July, according to the World Gold Council. Gold investment demand also grew across ASEAN markets, with Singapore, Indonesia, Malaysia, and Thailand reporting double-digit increases year on year.

The council noted that OTC investments remained stable in 2024, reflecting high-net-worth individuals' efforts to hedge geopolitical and economic risks. Unlike exchange-traded transactions, OTC investments are conducted directly between two parties.

Jewelry Sector Struggles

The jewelry sector faced challenges due to higher prices, with demand falling 11% year on year—the only outlier as other sectors experienced growth. The report suggested that jewelry demand is likely to remain weak in 2025, as consumer spending power is dampened by higher prices and slow economic growth.

Analysts say that in 2025 central banks are expected to remain in the driving seat and gold ETF investors to join the fray amid lower, albeit volatile interest rates.