Global gold demand hits record high in CY25 amid structural shift

Global gold demand hit a record high of ~5,000 MT in CY25, an 8% YoY increase, driven by a surge in investment demand. A report notes a structural shift as jewellery consumption fell due to elevated prices, a trend also observed in India.

Global gold demand has reached a record high in CY25, driven by a sharp rise in investment demand even as jewellery consumption declined due to elevated prices, highlighted a report by CaredEdge Ratings.

According to the data shared in the report, total global gold demand rose by around 8 per cent year-on-year to approximately 5,000 metric tonnes (MT) in CY25, marking an all-time high despite macroeconomic challenges and higher prices.

Structural Shift in Gold Consumption

A key trend observed during the year was a structural shift in the composition of gold consumption. The report mentioned that the share of jewellery in global demand dropped significantly to around 33 per cent in CY25, well below its long-term average of about 50 per cent, as consumers reduced discretionary purchases in response to rising prices. It stated "Composition of gold consumption globally has undergone a structural shift with jewellery's share falling significantly....well below its long-term average... The trend is visible in Indian market as well"

The shift was also visible in India, where the share of jewellery consumption declined to below 60 per cent of total gold purchases in CY25, compared to a long-term average of around 70 per cent. This indicates a clear change in consumer behaviour, with buyers becoming more cautious on discretionary spending.

Investment Demand Hits Record Highs

At the same time, investment demand for gold surged to record levels globally as well as in India. Increased buying of gold exchange-traded funds (ETFs), along with bar and coin purchases, drove the growth, reflecting strong safe-haven demand amid geopolitical uncertainty and market volatility. In India, the report added that the share of investment demand in total gold consumption rose sharply to 42 per cent in CY25, up from 29 per cent in CY24, highlighting a growing preference for gold as a financial asset rather than just for consumption.

Central Banks Bolster Demand

Central banks also continued to play a significant role in supporting global demand. They maintained large-scale gold accumulation for the fourth consecutive year, underscoring gold's importance in reserve diversification, especially in the context of geopolitical challenges.

The report suggests that while overall gold demand remains strong, its composition is undergoing a notable shift, with investment demand increasingly driving the market as jewellery consumption declines. (ANI)

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