(Bloomberg) — The appetite for gold from the world’s central banks shows no signs of slowing, even as the gold industry comes off a record year of demand for the precious metal, according to the World Gold Council.
“Geopolitical and economic uncertainty remains high in 2025 and it seems as likely as ever that central banks will once again turn to gold as a stable strategic asset,” the industry association said Wednesday in its Gold Demand Trends report.
The outlook comes after the council highlighted an all-time high in annual demand last year as central banks “continued to hoover up gold at an eye-watering pace.” Gold jewelry was an outlier, with demand falling due to soaring prices.
“We expect central banks to stay in the driving seat and gold ETF investors to join the fray,” the report said. “Jewelry demand will remain under pressure and we may see further growth in recycling. Mine supply is expected to remain robust.”
Central banks bought 1,045 metric tons of gold last year, worth about $96 billion at Tuesday’s prices, with Poland, India and Turkey the biggest buyers, according to the group. Central banks have been net buyers for 15 years, but the pace of annual purchases has roughly doubled since the outbreak of war in Ukraine, as authorities sought to rebalance reserves away from US dollar assets.
“I think the biggest surprise on the demand side is the fact that central banks bought a thousand tons last year,” said John Reade, senior market strategist with the trade body. “There’s been broad-based central bank buying, and more than we estimated at the beginning of the year.”
Gold prices rose 27% over the year as investors sought safe haven from conflicts in Ukraine and the Middle East, and central banks pivoted to cutting interest rates. Total gold demand rose 1% to an annual record of 4,974 tons last year, according to the report.
Higher prices dented jewelry consumption, which fell 11% to 1,877 tons. China accounted for much of the decline, with jewelry demand falling into second place behind India for the second time in three years.
“China remains the biggest gold market — obviously jewelry demand fell a lot, but investment demand increased,” Reade said in an interview. “The ratio between two could almost be used as a crude measure of economic sentiment within China.”
Investor sentiment may improve should the People’s Bank of China continue announcing gold purchases, according to the report. Central banks’ buying motivations tend to be more strategic than other investors, and sales have been relatively rare in the past 15 years. Because of this, these institutions tend to be less reactive to price moves — providing an important pillar of support for bullion prices.
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