Quick overview

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During the first quarter of 2026, purchases of gold bars and coins helped support global demand, while geopolitical tensions continued to play a central role in shaping the outlook for the precious metal.

The recent correction in gold prices was largely tied to renewed inflation concerns stemming from energy supply restrictions and the resulting expectations of higher interest rates. As a result, interest-rate expectations are likely to remain one of the key drivers of sentiment in the gold market.

At the same time, investors are also reassessing the outlook for the Federal Reserve under the future leadership of Kevin Warsh, who has signaled support for a less market-oriented Fed, a smaller balance sheet, and broader structural changes within the U.S. central bank.

Gold Demand Reaches Record Value

According to data from Metals Focus, Refinitiv GFMS, and the World Gold Council, total gold demand—including over-the-counter (OTC) transactions—rose 2% year over year to 1,231 tons during the first quarter.

Although volume growth was relatively modest, the sharp increase in gold prices drove a 74% surge in the value of quarterly demand, reaching a record $193 billion.

On the supply side, global gold supply increased 2% year over year, supported by modest gains in mining production and a 5% rise in recycling activity.

Investment demand now significantly exceeds production growth. At the same time, weaker jewelry demand combined with stronger investor interest has continued to reshape the composition of global gold demand in recent years.

Asian Investors Lead Surge in Bar and Coin Demand

One of the quarter’s most notable trends was the strong demand for gold bars and coins, which reached 474 tons—up 42% year over year and marking the second-highest quarterly level ever recorded.

Asian investors led the buying wave, aggressively accumulating gold investment products. Global purchases of bars and coins became the main driver of overall gold demand during the quarter.

Meanwhile, inflows into gold-backed ETFs continued, with holdings increasing by 62 tons during the quarter. However, that pace remained below the exceptionally strong first quarter of 2025, when ETF demand rose by 230 tons before major outflows from U.S.-based funds in March.

Regional trends diverged sharply: Asian investors continued adding exposure to gold ETFs, while Western investors reduced positions later in the quarter.

Jewelry Demand Weakens as Prices Hit Records

The jewelry market remained under pressure amid record-high gold prices. Jewelry demand volumes fell 23% year over year, although total consumer spending on gold jewelry rose 31%.

The figures suggest that sentiment toward gold jewelry remains positive, but consumers are purchasing smaller quantities due to elevated prices.

In other words, while physical demand volumes declined, the overall value of jewelry purchases surged as buyers spent more despite acquiring less gold.

Central Banks Continue Buying

Central banks remained major buyers of gold during the quarter, adding a net 244 tons to reserves—up 3% year over year—even as selling activity also increased.

Overall, official-sector purchases continued to outpace sales, reinforcing the long-term trend of central banks steadily increasing their gold holdings.

Demand for gold used in technology also rose 1% to 82 tons, largely driven by continued expansion in artificial intelligence infrastructure.

What Comes Next?

The quarter unfolded against a backdrop of record prices for Gold. The LBMA gold price reached a record quarterly average of $4,873 per ounce and hit an all-time high of $5,405 in January before undergoing a significant correction. Even after the pullback, gold delivered a 6% return during the first quarter.

Looking ahead, analysts believe geopolitical risk premiums will remain one of the key drivers of gold demand throughout 2026.

Persistent inflation, elevated metal prices, and geopolitical uncertainty are expected to continue supporting investment demand and central bank purchases, although sustained high interest rates could become a headwind over time.

Meanwhile, jewelry production volumes are likely to remain under pressure due to persistently high prices, though price corrections may create buying opportunities that help stabilize overall consumer spending.