Demand steadies in Q2 as price softens
H1 total demand volume slightly firmer, value rockets
Total gold demand, including OTC, was unchanged y/y at 1,269t in Q2. This took demand for the first half year to 2,522t (+2% y/y), with a record value of US$380bn.
Gold ETFs came under selling pressure in Q2 (-45t). Moderate outflows were in response to weaker gold prices and, particularly in North America, upward adjustments to both inflation and interest rate expectations alongside a strengthening US dollar.
Bar and coin investment held steady y/y (307t) in Q2. This signalled a return to more typical levels of buying following two extraordinarily strong quarters.
Central banks made significant gold purchases in Q2 (289t). After a notable Q1 slowdown following a downward revision to our data, buying among this cohort recovered sharply to the lofty levels that have been typical in the last four years.
Jewellery demand fell to its lowest quarterly volume since the pandemic (278t), as high gold prices and broader inflationary pressures continued to constrain affordability. In comparison, spending on gold jewellery was up 14% y/y at US$40bn, confirming gold’s continued importance in share of wallet.
Technology usage of gold again firmed slightly (80t) as AI-related demand offset weakness in the consumer electronics market.
Highlights
- The LBMA (PM) gold price averaged US$4,506.29/oz in Q2. The price was 8% lower than the Q1 record, but 37% higher than the average from Q2 2025.
- Total gold supply held steady at 1,269t in Q2. A 2% y/y increase in mine production offset a 6% y/y decline in recycling as lower q/q gold prices discouraged selling of old gold jewellery.
Outlook
We expect investment to remain the primary driver of demand growth through the second half, supported increasingly by OTC activity and Asian buying. Central banks remain on course for another strong year, although likely lower than 2025. Jewellery volumes will likely remain under pressure from high gold prices. We see only modest growth potential from mine production and recycling.
Shaokai Fan, Head of Asia (ex-China) and Global Head of Central Banks at the World Gold Council, added Australian demand perspective:
“Australian investment demand for gold flatlined during the June quarter, as cooling gold price momentum and rising local yields may have deterred investors.
“Despite a severe pullback in bar and coin demand in Q2, down 59% year-on-year, Australian investors still added 1.5t to their portfolios, reflecting a continued, typically long-term preference for owning gold in its most physical form. This demand, albeit the lowest in our quarterly data series, countered 1.2t gold ETF outflows over the same period, a reversal of the 2t inflows recorded for Q2 2025.
“While the momentum trade that fuelled gold's rally over the past year has faded, fundamental drivers to gold allocation remain: central banks diversifying reserves, investors hedging against shocks and seeking portfolio diversification, alongside growing demand in Asia. At the same time, waning confidence in political and fiscal stability, combined with escalating geopolitical risks, is pushing investors to prioritise resilience in portfolio construction. Gold's proven ability to preserve long-term wealth sits at the heart of that shift.”
“Beyond investment markets, jewellery demand in Australia contracted 4% year-on-year, more softly than in other markets but in line with global trends, as elevated prices continued to curb consumption.”
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