Gold supply maintained its long-term upward trajectory, reaching a record high of 1,313 tons in Q3 2025, marking a 3% year-on-year increase. On the demand side, gold consumption (excluding OTC and other categories) rose to 1,258 tons, up 5% YoY and 16% quarter-on-quarter. The surge in gold prices during Q3 was primarily driven by accelerated investment demand across all forms—including bars, coins, and ETFs—fueled by persistent geopolitical instability, a weaker U.S. dollar, and heightened concerns over the Federal Reserve’s independence, compounded by the U.S. government shutdown. With fiscal deficits elevated globally and rising bond yields amid rate cuts reflecting debt sustainability concerns, Huaxi Securities remains optimistic about gold’s long-term prospects.

**Supply**: Total gold supply in Q3 2025 climbed 3% YoY to 1,313 tons, supported by record mine production and higher recycling volumes, though hedging activities slightly offset gains. Year-to-date supply rose 1% to an all-time high of 3,717 tons. Recycling saw the sharpest increase (+3% to 1,041 tons) as consumers capitalized on a 47% YTD dollar-denominated gold price rally, triggering opportunistic selling.

**Demand**: Q3 gold demand (ex-OTC) grew 5% YoY and 16% QoQ to 1,258 tons. Jewelry fabrication fell 23% YoY to 419.2 tons, while technology usage dipped 2% to 81.7 tons. Investment demand surged 47% YoY to 537.2 tons, central bank purchases rose 10% to 219.9 tons, and OTC/other demand dropped 33% to 55.2 tons.

**Jewelry**: Despite seasonal QoQ rebounds in India and China, jewelry demand declined YoY across most markets due to record-high prices eroding affordability. Global jewelry spending still rose 13% YoY to $41 billion. YTD jewelry consumption fell 18% to 1,095 tons but remained above 2020’s trough of 894 tons.

**Investment**: Geopolitical risks, dollar weakness, and fears of Fed politicization drove safe-haven inflows, with total YTD investment demand reaching 1,566 tons—just 6% below 2020’s peak. In dollar terms, investment hit $161 billion, more than double 2024’s $63 billion and 74% above 2020’s record.

**Central Banks**: After two quarters of slower buying, central banks accelerated purchases by 28% QoQ to 220 tons in Q3, 6% above the five-year average. YTD official sector demand totaled 634 tons, below recent years but well above pre-2022 averages.

**Industrial**: U.S. tariff threats spurred front-loaded electronics demand earlier in 2025, dampening Q3’s typical seasonal uptick. Record gold prices pressured manufacturers to seek cost-saving alternatives, potentially reshaping long-term industrial demand.

**Outlook**: Ongoing U.S. fiscal strains (debt surpassing $38 trillion), a second 25bp rate cut, and accelerating de-dollarization reinforce gold’s appeal. Huaxi recommends gold equities—currently undervalued—as leveraged plays on higher prices, highlighting stocks like **Chifeng Gold (600988.SH)**, **Shandong Gold (600547.SH)**, and **China Gold International (02099)**.

**Risks**: Unexpected U.S. economic shifts, Fed policy reversals, or escalations in Ukraine/Middle East conflicts.