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Key Points

In the first quarter of 2025, gold investment demand increased significantly by 170% largely due to a resurgence in gold ETF inflows. The geopolitical landscape, including tariff wars and a weakening US dollar, drove investors toward the safety of gold. Central banks, particularly those in emerging markets, continued their gold purchases, reinforcing gold as a strategic asset. Despite high prices impacting jewelry demand, the market saw a notable appreciation in value due to the soaring prices.

Key Points: Gold Investment Soars 170% in Q1 2025 as ETF Inflows Surge

  • Gold investment demand up 170% in Q1 2025
  • ETF inflows lead the rise amid global tensions
  • Central banks bolster reserves with 244 tonnes added
3 min read

ETFs inflow drive 170 pc jump in gold investment globally in Jan-March

Global gold investment skyrockets 170% in Q1 2025, driven by ETF inflows amid geopolitical tensions.

"The surge in ETF inflows marks the strongest quarterly demand in three years. - Motilal Oswal Private Wealth"

New Delhi, May 30

The gold investment demand saw a dramatic 170 per cent rise (year-on-year) in the January-March quarter, driven by a strong rebound in gold ETF inflows, particularly in India, Europe and Asia, a report showed on Friday.

According to Motilal Oswal Private Wealth’s ‘May Alpha Strategist Report’, in Q1 2025, the gold market experienced a historic surge, with prices reaching record highs amid escalating geopolitical tensions, tariff wars, and a weakening US dollar.

The total supply rose modestly, but the soaring price led to a significant increase in market value.

Central banks maintained robust buying, adding 244 tonnes, signalling continued confidence in gold as a strategic reserve asset, especially among emerging markets.

Meanwhile, jewellery demand declined sharply under the weight of high prices, with India seeing a 25 per cent drop in volume despite a slight rise in value, as consumers shifted to smaller purchases or exchanged old jewellery.

The Reserve Bank of India slowed its gold accumulation but still increased its holdings, reflecting a cautious yet strategic stance. Overall, the quarter highlighted gold's enduring appeal as a hedge against uncertainty, even as traditional consumption showed strain.

The first quarter of 2025 witnessed a dynamic gold market, marked by record-setting prices and notable shifts in demand across various sectors.

Total gold supply reached 1,206 tonnes, a 1 per cent increase year-on-year and the highest for the first quarter since 2016. This slight uptick in demand volumes translated to a significant 40 per cent rise in value, reflecting the surging price of gold.

The main factors fuelling this price are the tariff wars, geopolitical uncertainty, stock market volatility, and US dollar weakness.

The domestic spot gold prices in India also mirrored this trend, rising 23 per cent to Rs 93,217 per 10 grams.

Investment in gold ETFs lead to a significant jump gold investment demand in Q1 2025, reaching 552 tonnes, marking a 170 per cent on-year increase. This level almost matched that seen in Q1 2022 following the outbreak of the Russia-Ukraine war. The surge was primarily driven by a sharp revival in gold ETF inflows, which recorded their strongest quarterly demand for three years.

Global gold-backed ETFs saw holdings increase by 226 tonnes during the quarter, bringing collective holdings to 3,445 tonnes. This was boosted by trade tensions and gold price momentum, with investors rushing for the safety of gold.

The Reserve Bank of India added 0.6 tonnes of gold to its reserves in March, bringing total holdings to a record 879.6 tonnes, or 11.7 per cent of its total foreign exchange reserves.

- IANS

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Reader Comments

R
Rahul K.
Not surprised at all! With elections happening and global tensions rising, gold is always the safest bet for us Indians. My grandfather used to say "Sone pe suhaga" - and he was right! ETFs make it easier for younger investors like me to participate. �
P
Priya M.
The jewellery demand drop shows how middle class families are struggling. At ₹93k/10g, how can we afford weddings? My sister had to compromise on her mangalsutra weight last month. Gold ETFs are good but nothing beats physical gold's emotional value in our culture.
A
Amit S.
Smart move by RBI to keep accumulating gold reserves. With US dollar weakening, we need to diversify. China has been doing this for years. More power to our forex management! 🇮🇳
N
Neha T.
As a financial advisor, I'm seeing huge interest in gold ETFs from millennials. Traditional aunties still prefer physical gold, but digital gold is the future. The 170% jump proves Indians are becoming smarter investors beyond just FD and real estate.
V
Vikram J.
While gold is good, we shouldn't ignore other assets. The report mentions stock market volatility - that's actually a buying opportunity! Gold ETFs are fine for 10-15% portfolio allocation max. Don't put all eggs in one basket, even if it's golden!
S
Sunita R.
The high prices are hurting small jewelers in my town. Many families are doing "exchange offers" instead of buying new. Government should think about reducing import duty to make gold more affordable for common people during these tough times.

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