Gold ETF investment jumps 170% as jewellery demand slumps: Motilal Oswal Private Wealth

Global gold demand reached a Q1 record in 2025, driven by strong ETF inflows and continued central bank buying, despite a slowdown from the previous year. Meanwhile, jewellery demand fell sharply due to high prices, according to a release by Motilal Oswal Private Wealth.

The gold market experienced a historic surge, with prices reaching record highs amid escalating geopolitical tensions, tariff wars, and a weakening US dollar. Total supply rose modestly, but the soaring prices led to a significant increase in overall market value.

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Investment demand saw a dramatic 170% year-on-year rise, driven by a strong rebound in gold ETF inflows—particularly in Europe, Asia, and India. Central banks maintained robust buying, adding 244 tonnes, signaling continued confidence in gold as a strategic reserve asset, especially among emerging markets.

Jewellery demand, however, declined sharply due to high prices. In India, volumes dropped 25%—the lowest quarterly level since Q3 2020—as record prices impacted affordability. Despite the volume drop, the value of jewellery demand in India was 3% higher year-on-year.

According to the release, the first quarter of 2025 witnessed a dynamic gold market, marked by record-setting prices and notable shifts in demand across various sectors.

Total gold supply reached 1,206 tonnes, a 1% year-on-year increase and the highest first-quarter supply since 2016. This translated into a significant 40% year-on-year rise in market value, reflecting the surge in gold prices.

Gold ETF investments drove the sharp jump in overall gold investment demand in Q1 2025, which reached 552 tonnes—a 170% increase year-on-year. This level nearly matched that of Q1 2022, which followed the outbreak of the Russia-Ukraine war, the release noted.

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The surge was primarily driven by a sharp revival in gold ETF inflows, which recorded their strongest quarterly demand in three years. Global gold-backed ETFs saw holdings increase by 226 tonnes during the quarter, bringing collective holdings to 3,445 tonnes. This was fueled by escalating trade tensions and strong gold price momentum, as investors rushed toward the safety of gold.