Gold Demand Hits Record As Retail Buyers Retreat

Global gold demand reached $188 billion in the third quarter, while the metal remains well below its January peak. This paradox does not reflect a general rush. Central banks and ETFs are buying more, while individuals reduce their physical purchases.

The $188 billion record mainly comes from price increases

According to the World Gold Council, the value of global demand increased by 22% year on year to reach $188 billion in the third quarter, while gold has just lost 7% in October. However, the volume purchased fell by 1% to 1,369 tonnes. The record in dollars therefore mainly reflects the rising cost of the metal, whose average price increased by 23% year on year, to $4,262 per ounce.

In other words, buyers spent more to obtain slightly less gold. This distinction prevents interpreting the $188 billion as a uniform acceleration of demand.

The figures actually reveal a deeply divided market :

• Central banks purchased 321 tonnes, up 42% ;
• Gold-backed ETFs absorbed 211 tonnes ;
• Demand for bars and coins dropped 19%, to 268 tonnes ;
• Jewelry consumption fell 17%, to 313 tonnes ;
• Technological demand rose 3%, to 85 tonnes.

Jewelry recorded its weakest third quarter since the start of the statistical series in 2000. In China and India, consumers favored lighter pieces or those containing less gold to limit their expenses.

The same caution appears among buyers of bars and coins. Their demand decreased despite economic and geopolitical uncertainties which, theoretically, should favor safe assets. The World Gold Council thus halved its forecast for physical investment demand growth in 2026, from 400 to 200 tonnes.

Central banks are gradually replacing individuals

For the first time in the observed period, net purchases by central banks exceeded global jewelry consumption. Official institutions acquired 321 tonnes, versus 313 tonnes destined for jewelry. One year earlier, the latter still led central banks by about 150 tonnes.

This evolution transforms the market structure. Gold depends less on consumers who buy it to wear or physically save, and more on actors with horizons extending over several years. Central banks primarily seek diversification, absence of counterparty risk, and less dependence on foreign currencies.

Their influence remains difficult to measure precisely. Of the estimated 321 tonnes of official purchases in the third quarter, only about 120 tonnes have been publicly attributed to countries. The remaining roughly 201 tonnes, or nearly 63%, come from estimates including late declarations or unreported operations.

China reportedly declared 63 tonnes of purchases and Poland 40 tonnes. This opacity proves neither a coordinated strategy nor a secret dedollarization movement. However, it limits the possibility of identifying countries responsible for the acceleration and the assets used to finance their acquisitions.

ETFs constitute the other major support. After outflows in the second quarter, they recorded inflows of 211 tonnes and pushed their holdings to a record 4,256 tonnes. Louise Street, analyst at the World Gold Council, describes it as: “a contrast with individual investors, who stayed on the sidelines amid uncertainty surrounding gold price outlooks”.

Strong demand does not guarantee immediate protection

Despite these institutional purchases, gold ended October around $3,913 per ounce, down 6.3% for the month and about 25% below its January peak. Central banks can support the market over the long term, but they do not solely determine the short-term price.

Interest rates, the dollar, futures market positions, and liquidity needs can temporarily neutralize this support. In October, global ETFs still received $2.7 billion and added 19 tonnes. Yet, the total value of their assets fell by 6%, as the price decline outweighed the effect of new inflows.

This gap shows that flows are not an automatic performance forecast. A central bank can buy gold to reduce geopolitical risk over ten years, while an investor expects protection against an immediate stock market drop. They hold the same asset but assign it different missions.

The important signal is therefore not just the $188 billion record. It lies in the shift of demand towards official reserves and financial products, while physical buyers retreat. Gold retains strong strategic support, but its price becomes more dependent on a small number of actors capable of waiting a long time before their bet pays off.