Global demand for gold reached $188 billion in the third quarter, while the metal remains well below its January peak. This paradox does not reflect a general rush. Central banks and ETFs are buying more, while individuals are reducing their physical purchases.
In brief
- Global demand for gold hits a record $188 billion in the third quarter, despite a decline in volumes purchased.
- Central banks acquired 321 tonnes of gold, exceeding demand from the jewelry sector for the first time.
- ETFs saw 211 tonnes of inflows, while purchases of bars and coins fell 19%.
- Individuals are reducing their physical purchases in the face of rising prices and market uncertainties.
- Despite this strong institutional demand, gold remains around 25% below its January peak, showing that purchases do not guarantee an immediate rise in prices.
The record of 188 billion comes mainly from the rise in prices
According to the World Gold Council, the value of global demand increased by 22% year-on-year to reach $188 billion in the third quarter, while gold just lost 7% in October. However, the volume purchased fell by 1%, to 1,369 tonnes. The record in dollars therefore mainly reflects the rise in the price of the metal, whose average price increased by 23% over one year, to 4,262 dollars per ounce.
In other words, buyers spent more to get slightly less gold. This distinction prevents the $188 billion from being interpreted as a uniform acceleration in demand.
The numbers reveal in reality a deeply divided market:
- Central banks bought 321 tonnes, up 42%;
- Gold-backed ETFs absorbed 211 tonnes;
- Demand for bars and coins fell 19%, to 268 tonnes;
- Jewelry consumption fell by 17%, to 313 tonnes;
- Technological demand increased by 3%, to 85 tonnes.
Jewelry recorded its weakest third quarter since the start of the statistical series in 2000. In China and India, consumers favored pieces that were lighter or contained less gold in order to limit their spending.
The same caution appears among buyers of bars and coins. Their demand has declined despite economic and geopolitical uncertainties which, in theory, should favor safe haven assets. The World Gold Council thus halved its forecast growth in physical investment demand for 2026, from 400 to 200 tonnes.
Central banks are gradually replacing individuals
For the first time in the period observed, net purchases by central banks exceeded global jewelry consumption. Official institutions acquired 321 tonnes, compared to 313 tonnes intended for jewelry. A year earlier, the latter was still ahead of the central banks by around 150 tonnes.
This development is transforming the structure of the market. Gold depends less on consumers who buy it to physically wear or save it, and more on players whose horizons extend over several years. Central banks mainly seek diversification, the absence of counterparty risk and less dependence on foreign currencies.
Their influence, however, remains difficult to measure precisely. Of the estimated 321 tonnes of official purchases in the third quarter, only about 120 tonnes have been publicly allocated to countries. The remaining approximately 201 tonnes, or nearly 63%, come from estimates incorporating late declarations or uncommunicated operations.
China reportedly declared 63 tonnes of purchases and Poland 40 tonnes. This opacity proves neither a coordinated strategy nor a secret dedollarization movement. However, it limits the possibility of identifying the countries responsible for the acceleration and the assets used to finance their acquisitions.
ETFs are the other major support. After exits in the second quarter, they recorded 211 tonnes of inflows and increased their holdings to a record 4,256 tonnes. Louise Street, analyst at the World Gold Council, describe Thus : “a contrast with individual investors, who remained on the sidelines in the face of uncertainty surrounding the outlook for the price of gold”.
High demand does not guarantee immediate protection
Despite these institutional purchases, gold ended October around $3,913 per ounce, down 6.3% for the month and about 25% below its January high. Central banks can support the market over time, but they do not alone determine its price in the short term.
Interest rates, the dollar, futures market positions and liquidity needs may temporarily neutralize this support. In October, global ETFs received another $2.7 billion and added 19 tons. However, the total value of their assets fell by 6%, as the fall in price exceeded the effect of the new contributions.
This discrepancy shows that the flows do not constitute an automatic performance forecast. A central bank may buy gold to reduce geopolitical risk over ten years, while an investor expects protection against an immediate stock market decline. They hold the same asset, but do not entrust it with the same mission.
The important signal is therefore not only the record of 188 billion dollars. It lies in the transfer of demand towards official reserves and financial products, while physical buyers retreat. Gold retains powerful strategic support, but its price becomes more dependent on a small number of players able to wait a long time before their bets bear fruit.
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