Gold’s breathless rally: How are jewellery buyers, central banks and investors responding?

Group 1: Gold Price Dynamics - Gold prices have increased by 44% this year due to fears of higher global inflation, economic uncertainty from the US trade dispute, and geopolitical tensions [1] - Factors contributing to the rise in gold prices include increased trade barriers, concerns over US fiscal outlook, and hostilities between Israel and Iran [1] - JP Morgan predicts gold could reach $4,000 an ounce, up from the current price of $3,657, amid recession probabilities and ongoing trade risks [1] Group 2: Gold Investment Demand Outlook - The World Gold Council (WGC) indicates that falling interest rates and ongoing uncertainty will sustain investor demand for gold, particularly through gold ETFs and OTC transactions [2] - Central bank demand for gold is expected to remain strong in 2025, although it will moderate from previous records, staying above the pre-2022 average of 500-600 tonnes [2] - US investors are currently driving the surge in gold ETF purchases, but a cautious approach may emerge if geopolitical and economic concerns diminish [2] Group 3: Gold Consumption Demand - Jewellery demand for gold has decreased by 341 tonnes in Q2 2025, lower than the 395 tonnes in Q2 2024 and 383.4 tonnes in Q1 2025, primarily due to high gold prices [3] - Jewellers anticipate a return of consumer demand during the festival period, aided by savings from GST cuts on cars and FMCG products [3] - Consumers are exploring alternatives such as diamond-studded jewellery and lower-carat gold options, with some opting to exchange old jewellery for new [3] Group 4: Central Bank Gold Purchases - Central bank purchases of gold have slowed, with only 10 tonnes bought in July 2025 due to rising prices [4] - The National Bank of Poland is the largest net purchaser in 2025, acquiring 67 tonnes by July, despite stable gold reserves since May 2025 [4] - Global central banks added 166 tonnes of gold in Q2 2025, a 33% decline from Q1 2025, marking the lowest quarterly demand since Q2 2022, yet still 40% higher than the average quarterly purchases from 2010 to 2021 [4] Group 5: Silver Price Performance - Silver prices have risen over 43% this year, outperforming gold's 38% increase, driven by robust industrial demand and supply constraints [5] - The Silver Institute's World Silver Survey 2025 indicates that silver was expected to outperform gold due to supply shortages, but macro and geopolitical factors have favored gold [5] - Industrial demand from sectors like solar, electric vehicles, and electronics continues to support silver prices [5]