The global gold market posted modest growth in volume but a dramatic rise in value in the first quarter of 2026, as investors flocked to the metal’s safe-haven appeal, physically backed exchange-traded funds recorded further inflows, and central banks continued to add to reserves despite heightened market volatility.
According to the World Gold Council’s Q1 2026 Gold Demand Trends report, total quarterly gold demand, including over-the-counter (OTC) activity, reached 1,231 tonnes, up 2% year-on-year. However, the value of that demand surged 74% to a record US$193 billion, reflecting the sharp rise in gold prices during the quarter. The report paints a picture of a market increasingly driven by investment demand, particularly in Asia, while jewelry volumes came under pressure from elevated prices. At the same time, official sector buying remained strong, reaffirming gold’s strategic role in reserve management during periods of geopolitical and financial uncertainty.
Retail investors were a major force behind the quarter’s gains. Global bar and coin demand rose 42% year-on-year to 474 tonnes, making it the second-highest quarterly total on record. Investors were attracted by gold’s price momentum, inflation concerns, geopolitical risk, currency weakness, and a lack of compelling alternatives in other asset classes.
China was the standout market. Bar and coin demand there surged 67% year-on-year to a record 207 tonnes, far exceeding the previous quarterly high of 155 tonnes in Q2 2013. Other Eastern markets also recorded notable gains, with stronger buying in India, South Korea, and Japan, reinforcing what the World Gold Council described as an ongoing structural shift in global gold demand toward Asia. Western markets also contributed to the rise. Bar and coin demand increased 14% in the United States and 50% in Europe, underscoring gold’s broad appeal amid unsettled macroeconomic conditions. The World Gold Council noted that much of the strength was concentrated in January, when gold prices accelerated sharply. However, buying continued even during the subsequent correction as some investors viewed the pullback as a buying opportunity.
Demand for physically backed gold ETFs remained positive in the first quarter, with holdings increasing by 62 tonnes. The strongest support came from Asian-listed funds, which added 84 tonnes over the quarter. However, the overall pace of ETF buying was moderated by sizeable outflows in March, particularly from U.S.-listed funds, which cooled what had otherwise been a strong start to the year. Even so, ETF demand remained positive, suggesting that investor interest in gold-backed financial products continues despite shifting rate expectations and market turbulence.
In contrast to investment demand, jewelry demand declined sharply, falling 23% year-on-year to 300 tonnes, the lowest quarterly level since Q2 2020. High prices weighed on volumes across all major markets, with notable declines in China (-32%), India (-19%), and the Middle East (-23%).
Yet the downturn in tonnage did not translate into lower consumer spending. In value terms, jewelry demand rose significantly, with the World Gold Council estimating that jewelry purchases climbed 31% to a record US$47 billion. This suggests that while consumers bought smaller amounts of gold jewelry, they remained willing to spend more overall, indicating enduring confidence in gold’s long-term value.
The report also noted that in markets such as China and India, some traditional jewelry demand appears to have shifted toward bar and coin purchases, since jewelry in those markets often serves as a proxy investment.
Central banks remained an important pillar of the market in Q1. Official sector institutions added 244 tonnes of gold to global reserves during the quarter, slightly above year-earlier levels and stronger than both the previous quarter and the five-year average. The World Gold Council said this continued buying highlights gold’s role as an indispensable reserve asset, particularly during periods of severe market stress. Even as some institutions increased selling for tactical or liquidity reasons, overall net purchases remained robust. A small number of official institutions did sell during the quarter, including the Central Bank of the Republic of Türkiye, the Central Bank of the Russian Federation, and the State Oil Fund of the Republic of Azerbaijan. The report linked some of this activity to the need to manage liquidity pressures amid geopolitical instability and supply-chain disruptions, particularly in energy markets.
Still, the broader trend remains one of sustained reserve diversification into gold. The World Gold Council maintained its view that central banks are likely to purchase between 700 and 900 tonnes this year, consistent with 2025 levels, though below the more than 1,000 tonnes annually seen in each of the previous three years. Additional developments in central bank gold management have reinforced this trend. The Bank of France reportedly executed a major gold reserve transaction, selling a 129-tonne reserve held in the United States and repurchasing it in Europe, generating an estimated US$15 billion profit. The move reflects a growing focus among central banks on both reserve diversification and storage strategy.
At the same time, China added 5 tonnes of gold to its reserves in March, while Turkey monetized 118 tonnes during the same period. Market observers have argued that the shift away from dollar-denominated reserves and toward gold is no longer a speculative narrative but an established global trend, particularly among BRICS+ nations.
On the supply side, total gold supply increased 2% year-on-year to 1,231 tonnes, matching total demand. Mine production reached a new first-quarter record, while recycling rose a modest 5%, despite elevated prices.
The relatively limited recycling response suggests that the market remains tight, even at historically high price levels. In other words, higher prices have not yet triggered a proportionate increase in secondary supply, a factor that may continue to support prices if investment and official demand remain firm.
Commenting on the report, Louise Street, Senior Markets Analyst at the World Gold Council, said:
“Gold’s volatility has markedly increased in 2026, with prices peaking above US$5,400/oz 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.
“Looking ahead, 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.”
The World Gold Council’s broader outlook remains constructive. It expects investment demand and central bank buying to continue as the key supports for the gold market through the rest of 2026. Persistent inflation, geopolitical tensions, and volatility in financial markets are likely to keep gold attractive as both a hedge and a reserve asset.
Some market commentators have taken an even more bullish stance. Analysts cited in recent market coverage suggest that gold could increasingly emerge as the primary alternative to the U.S. dollar in the global reserve system, with some projecting prices above US$6,000 per ounce. While such forecasts remain speculative, they reflect the growing belief that a changing global financial order is reinforcing structural demand for gold.
Taken together, the Q1 2026 data suggest that a single source of demand is not driving gold’s current strength. Instead, it reflects a broad-based alignment of forces: retail investors seeking safety, ETF investors maintaining exposure, central banks diversifying reserves, and consumers continuing to buy jewelry despite price pressure.
Although higher interest rates and elevated prices may create headwinds in some regions, gold’s resilience in the first quarter showed that it continues to serve multiple roles simultaneously as an investment, a store of value, a consumer good, and a strategic reserve asset. With geopolitical risks still elevated and reserve diversification accelerating, the foundations of demand appear likely to remain in place for the rest of 2026.