Gold ETFs see strongest demand in three years during March quarter, says World Gold Council

The first few weeks of Q2CY25 has seen an 'acceleration in demand' for global gold ETFs, said WGC, most notably coming from Asia, where flows have already surpassed the Q1 total.

The March quarter saw the strongest demand for gold ETFs in three years backed by robust inflows, which remained elevated on trade tensions and momentum in international gold prices, the latest World Gold Council report said on April 30.

Investment in gold reached 552 tonnes in Q1CY25, almost matching the level seen when the Russia-Ukraine war has started in the first quarter of 2022.

"The latest leg of the uptrend was set in motion by a pick-up in investment flows in January, initially sparked by US tariffs and cemented by concerns over erratic and unpredictable US policy announcements, fears of stagflation and/or recession, continued geopolitical jitters and the consequent turmoil in equity markets of such an uncertain environment," WGC report said. High networth and institutional investment flows remained positive, the report added.

The pursuit of the safe haven and diversification benefits in times of uncertainty lent strength to the price rally, which itself helped drive momentum in investment higher.

Gold ETF holdings increased by 226 tonnes during Q1CY25 to take the holdings to the highest level since May 2023, but still well-below the historical peak of November 2020. "Global demand for ETFs – which has been positive in 10 out of the last 12 months – accelerated in Q1. Already encouraged by gold’s price momentum, investors spooked by somersaulting US tariff policy rushed for the safety of gold," said WGC.

More importantly, the first few weeks of Q2CY25 has seen an 'acceleration in demand' for global gold ETFs, said WGC, most notably coming from Asia, where flows have already surpassed the Q1 total.

Price of gold continued to see fresh highs through the March quarter, with some forecasts projecting a further upside. The relentless surge in prices has led to subdued volume in gold jewellery, but in value terms, the quarter saw a growth compared to last year. Looming US trade tariffs, geopolitical uncertainty, which triggered a volatile quarter for stock market and US dollar weakness were among the factors that aided the price surge during the March quarter.

China has been a strong buyer of gold bars and coins through the quarter, posting its second-highest ever demand during the March quarter, also supported by its central bank buying.

The strong demand has led to another quarter of record global mine production of the precious metal. In value terms, total demand for gold in the March quarter matched the December quarter, at $111 billion.