Global gold demand rose a modest 2 per cent year-on-year to 1,231 tonnes in the January-March quarter, driven by a sharp 42 per cent surge in bar and coin investment to 474 tonnes amid geopolitical tensions and higher prices, according to the World Gold Council report released on Wednesday.

The WGC's Q1 2026 Gold Demand Trends report revealed that total quarterly gold demand, including OTC, increased by 2 per cent year-on-year to 1,231 tonnes in the January-March quarter, compared to 1,205 tonnes in the corresponding period of 2025.

While volumes increased modestly, the value of demand surged to a record $193 billion, up 74 per cent year-on-year.

The average gold price during the January-March quarter surged by 81 per cent to $4,873 an ounce compared with $2,860 an ounce in the same period of 2025.

"Geopolitical tensions attracted retail investors around the world to gold's price momentum and safe-haven appeal, driving bar and coin demand up 42 per cent. The impact of consumption via bars and coins further strengthened gold's safe haven appeal amid geopolitics and the current global confusion," WGC Regional CEO, India, Sachin Jain told PTI.

Demand bars and coins in China surged 67 per cent year-on-year to a record 207 tonnes, considerably higher than the previous quarterly record of 155 tonnes in the second quarter of 2013.

Other Eastern markets, including India, South Korea and Japan, also saw an increase in bar and coin buying, contributing to the ongoing structural shift in gold demand. This was also supported by strong growth in the US and Europe, up 14 per cent and 50 per cent, respectively.

Meanwhile, demand for physically-backed gold ETFs remained positive during the first quarter as holdings increased by 62 tonnes, largely supported by continued strength across Asian-listed funds, which added 84 tonnes over the quarter.

Sizeable outflows in March, mostly from US-listed funds, tempered what had been a very strong start to the year.

In contrast, jewellery demand declined sharply, falling 23 per cent year-on-year to 300 tonnes in reaction to the higher prices seen throughout the quarter.

Demand weakened across all major markets, with notable declines in China (32 per cent), India (19 per cent) and the Middle East (23 per cent).

However, in value terms, jewellery demand increased, indicating continued consumer willingness to spend on gold despite record prices.

"Market analysis suggests that some jewellery consumption has moved into bar and coin demand, particularly in markets like China and India where jewellery can act as a proxy investment," said Jain.

Meanwhile, Central banks continued to support overall demand, adding 244 tonnes to global reserves in the first quarter as purchases exceeded both the previous quarter and the five-year average despite an uptick in selling by a small number of official sector institutions, including the Central Bank of the Republic of Turkiye, the Central Bank of the Russian Federation and The State Oil Fund of the Republic of Azerbaijan.

The Reserve Bank of India made a fresh purchase of 300 kg of gold during the January-March quarter.

Further, the report revealed that total gold supply increased by 2 per cent year-on-year to 1,231 tonnes.

Mine production reached a new first-quarter record, while recycling increased modestly by 5 per cent despite elevated prices, suggesting a relatively muted supply response and tighter overall market conditions.

WGC Senior Markets Analyst Louise Street said gold's volatility has markedly increased in 2026, with prices peaking above USD 5,400 an ounce in January before a significant but contained correction.

"The combination of price momentum and heightened geopolitical risk propelled investment demand, most notably in Asia, as investors sought security in physical gold. Alongside this, continued central bank buying offset tactical selling," she said.

Looking ahead, she said, the geopolitical risk premium should continue to support investment demand, though higher-for-longer interest rates may present headwinds, especially in Western markets.

"Jewellery spending is expected to remain resilient even as high prices weigh on volumes. On the supply side, mine production is expected to grow modestly, although potential energy shortages could temper that outlook," Street added.

Published on April 29, 2026