Demand for gold-backed exchange-traded funds (ETF) surged over the first half of 2025, helping to drive overall growth in global gold investment amid a backdrop of geopolitical instability and as volatile markets continue to fuel appetite for the precious metal.
According to the World Gold Council’s latest Gold Demand Trends report, global gold ETFs have recorded net inflows of 170 tonnes over the June quarter alone. Additionally, strong demand over April and June more than offset a pullback seen in May, with Asian-listed funds contributing 70 tonnes, closely matching US flows.
Combined with a record-breaking March quarter, global gold ETF demand hit 397 tonnes over the first half of 2025, recording the strongest result since 2020, according to the report.
Bar and coin investment also rose by 11 per cent year-on-year to 307 tonnes, with investors from China accounting for 115 tonnes, while Indian investors accounted for 46 tonnes.
Senior market analyst at the World Gold Council, Louise Street, commented that global markets have managed to navigate a volatile start to 2025, a year characterised by tumultuous trade tensions, unpredictable US policy shifts and frequent geopolitical flashpoints.
“The robust investment activity we have seen in the first half of 2025 underscores gold’s role as a hedge against economic and geopolitical risks,” she said.
“Ongoing market volatility, coupled with gold’s impressive price performance in recent months, has also generated significant momentum, drawing capital from investors around the globe.”
Street noted the “remarkable” appreciation in gold of 26 per cent (in dollar terms), with the metal outperforming many major asset classes. She speculated that it is possible for gold to “trade within a relatively narrow range” over the second half of the year considering its impressive start to 2025.
“On the other hand, the macroeconomic environment remains highly unpredictable, which may underpin further gains for gold,” Street added. “Any material deterioration in global economic or geopolitical conditions could further amplify gold’s safe-haven appeal, potentially pushing prices higher still.”
Domestically, Australian gold ETFs have continued to attract strong inflows, adding 2 tonnes (equating to US$169 million) during the June quarter.
These inflows have lifted total holdings to 47.3 tonnes and assets under management (AUM) to US$5 billion, both hitting record month-end highs. Over the first half of the year, Australian ETF holdings have grown by 11.3 per cent, while AUM rose by 39 per cent, buoyed by inflows and rising gold prices.
Meanwhile, retail investment in physical gold also gained traction in Australia, the report showed, with bar and coin demand increasing by 18 per cent year-on-year over the quarter.
Much like other regions, however, jewellery consumption has declined by 10 per cent domestically, compared to starker drops in China (20 per cent) and India (17 per cent). Overall, total gold consumption in Australia increased by 6 per cent in the year to 30 June 2025.
The report further revealed that total quarterly gold demand, including over-the-counter trades, reached 1,249 tonnes over the quarter, an increase of 3 per cent annually.
Central banks added 166 tonnes over this period, maintaining elevated levels of purchasing (albeit slowing slightly) amid uncertainty. According to the council, survey data has shown that 95 per cent of central bank reserve managers expect global gold holdings to increase further over the next year.
Shaokai Fan, head of Asia-Pacific (ex-China) and global head of central banks at the World Gold Council, said that structural shifts have continued to favour gold.
“These include regulatory approval for Chinese insurers to invest in gold, a persistently weaker US dollar, and a passing of the demand baton from central banks to ETF investors,” Fan said. “These factors helped drive a 78 per cent year-on-year surge in global gold investment.”
He added that the investor base for gold is evolving, along with the nature and scale of risks that concern them.
The typically more passive ETF investors who have shifted to embracing gold as traditional assets are increasingly showing vulnerability to broader global risks, according to Fan.
“The old ‘fear of missing out’ is being superseded by a deeper ‘fear of asset debasement’,” Fan added. “In Australia and around the world, investors are adapting to a new and far less predictable market regime.”
