August 1st - Against a backdrop of mounting economic uncertainty and record-breaking gold prices, the gold market has attracted increased investor participation, driving significant growth in global gold demand. CWG Markets Forex indicates that the current market environment has renewed widespread attention toward safe-haven assets, with gold's diversified demand showing particularly strong performance, especially evident in the second quarter.

According to the World Gold Council's (WGC) Q2 Gold Demand Trends report, despite gold reaching historic highs, total gold demand (including over-the-counter investment) still increased to 1,249 tonnes, representing a 3% rise compared to the same period in 2024. CWG Markets Forex believes this growth was primarily driven by strong capital inflows into gold ETFs, while demand for gold bars and coins remained stable, demonstrating investors' continued confidence in physical gold.

The report notes that although high prices typically suppress physical gold demand, two consecutive quarters of robust performance have made the first half of this year the strongest opening for gold bar and coin investment since 2013. CWG Markets Forex states that this trend reflects the market's increasing sensitivity to economic outlook uncertainty, driving investors to seek traditional safe-haven channels.

In contrast, gold jewelry demand showed clear differentiation. While purchase volumes declined, global jewelry spending increased significantly. Data shows that Q2 global jewelry consumption fell 14% to 341 tonnes, the lowest level since Q3 2020. However, calculated by value, annualized spending increased 21% to $36 billion. CWG Markets Forex notes that this phenomenon highlights high-net-worth consumers' continued preference for gold jewelry, maintaining enthusiasm even in a high-price environment.

Investment Demand Becomes Gold Market's Dominant Force

Investment demand has once again emerged as the primary driver of the gold market. According to WGC data, Q2 2025 gold investment demand increased 78% year-over-year to 477.2 tonnes. CWG Markets Forex believes this demonstrates gold's continuously strengthening strategic role in asset allocation, particularly under the multiple influences of current dollar weakness, interest rate expectation adjustments, and rising geopolitical risks.

The report shows Western market investors are returning to gold ETFs, with capital inflows in H1 2025 reaching the highest levels since 2020. Meanwhile, Asian investors are not falling behind, with China's investment demand increasing 44% year-over-year. CWG Markets Forex states that this global synchronized buying provides solid support for gold prices.

Analysts point out that ETF inflow trends still have room for continued expansion, although the pace may not be as rapid as in the first half. The fundamentals for ETF and over-the-counter gold investment remain healthy, with investor expectations of potential Federal Reserve rate cuts beginning in September likely to further stimulate gold buying. CWG Markets Forex emphasizes that rate cut expectations will pressure bond yields and weaken the dollar, both factors that will continue providing upward momentum for gold prices.

Clear Demand Differentiation Across Sectors, Central Banks and Technology Show Different Trends

Beyond sustained investment demand strength, central bank gold reserve growth has also provided stable market support. Although Q2 central bank gold purchases totaled 166 tonnes, down 21% from the same period last year, H1 total purchases remained 41% above long-term averages. CWG Markets Forex believes that while central bank gold-buying enthusiasm has temporarily cooled, their recognition of gold as a reserve asset remains firm, with potential for recovery driven by gold price corrections or foreign exchange reserve expansion.

In contrast, technology sector gold demand declined slightly. Q2 technology gold usage fell 2% to 78.6 tonnes. CWG Markets Forex analysis indicates that trade uncertainty and high gold prices have pressured manufacturers. While AI industry-related component demand remains strong, the consumer electronics market continues facing challenges, potentially limiting technology gold usage recovery in H2.

Supply Response Lags, Recycled Gold Fails to Keep Pace with Price Movement

Amid substantial gold price increases, gold supply growth has been relatively modest. CWG Markets Forex data shows Q2 2025 total supply increased 3% to 1,248.8 tonnes, with mine production rising 1% to 908.6 tonnes. Recycled gold supply increased 4% year-over-year to 347.2 tonnes, but the response remains sluggish compared to price gains. Analysis indicates that while gold prices averaged 40% higher year-over-year and 15% higher quarter-over-quarter, recycling growth remained limited, showing market participants' continued caution toward selling gold at high prices.

Despite pressures in certain sectors, gold overall remains an important portfolio allocation asset. Its safe-haven function and stable returns in the current complex economic environment have again made it a focal point for investors. CWG Markets Forex believes that driven by multiple factors including ETF capital returns, positive central bank attitudes, and stable physical demand, the gold market's bullish pattern may continue into the second half of the year.