The World Gold Council (WGC) is set to release its report on gold demand for the first quarter of the year in the middle of next week. Preliminary insights suggest that the significant rise in gold prices during the first three months of 2025 was largely fueled by strong investment demand, particularly in gold exchange-traded funds (ETFs). According to Commerzbank commodity analyst Carsten Fritsch, gold ETFs saw inflows of 226 tons in Q1, marking a substantial shift compared to the previous quarter, which experienced only modest inflows and even noticeable outflows in the same period last year.
Jewelry Demand Weakened by Price Spike
On the other hand, jewelry demand likely took a hit due to the sharp increase in gold prices. Weak gold imports to major markets like India and China suggest that rising costs have dampened consumer interest in gold jewelry. The WGC report is expected to reflect this trend, painting a picture of strong investment interest but weaker demand from the jewelry sector.
Central Bank Purchases: Modest but Steady
Another key focus of the WGC’s upcoming report will be central bank gold purchases. While official data on central bank buying has been limited for nearly three years, the available figures for the past quarter show elevated purchase levels. However, it is unlikely that central bank buying will match the peak levels observed in the same periods of 2023 and 2024, when central banks collectively purchased over 300 tons of gold in each quarter. Despite the shift, Fritsch notes that these purchases will not have a significant impact on gold prices.
Gold Price Outlook: Uncertainty Remains the Key Driver
While the WGC report is expected to provide valuable insights into gold demand trends, the primary driver of gold prices in the near term is likely to remain high levels of economic and geopolitical uncertainty. As such, the gold price is expected to continue to be influenced by broader market sentiment, rather than the immediate impact of the WGC’s findings.
