Central Banks Keep Gold Buying Spree Alive, See ETFs Joining the Fray in 2025

Central banks, a major source of gold demand, bought more than 1,000 tons of the metal for the third year in a row in 2024.

Central banks drove demand for gold to the highest in seven years in 2024, buying more than 1,000 tons of the metal for the third year running as geopolitical and macroeconomic uncertainty fuelled buying interest.

The National Bank of Poland was the largest central bank buyer, adding 90 tons to its reserves, the World Gold Council (WGC) said in a quarterly report on Friday.

In the final quarter of 2024, when Donald Trump won the U.S. election, buying by central banks accelerated by 54% year on year to 333 tons, the WGC calculated, based on reported purchases and an estimate of unreported buying.

Last year’s investment demand for gold rose 25% to a four-year high of 1,180 tons, mainly because outflows from physically-backed gold exchange-traded funds (ETFs) dried up for the first time in four years.

Indicating a major shift in appetite for different products, investment demand for bars rose 10%, while coin buying fell 31%.

“In 2025, we expect central banks to remain in the driving seat and gold ETF investors to join the fray, especially if we see lower, albeit volatile interest rates,” WGC senior markets analyst Louise Street, said.

“Geopolitical and macroeconomic uncertainty should be prevalent themes this year, supporting demand for gold as a store of wealth and hedge against risk.”

Total gold demand, excluding over-the-counter (OTC) trading, rose 1% to 4,553.7 tons last year, the highest since 2022, the WGC said. It estimates that OTC demand fell 7% due to a slump in the final quarter of the year as profit-taking offset persistent demand from high net worth individuals.

Gold jewellery consumption, the biggest category of physical demand, fell 11% in 2024, while mine production was steady and recycling rose 15%.

The WGC expects jewellery demand to remain under pressure and recycling to rise further this year due to high prices.