Global interest in gold persists, fueling worldwide demand among investors
In the dynamic world of finance, gold has emerged as a beacon of stability in 2025. The global demand for the precious metal has witnessed a significant increase, driven by strong investment flows and central bank purchases.
The Chinese market, in particular, has seen high demand for bars and coins, reflecting a global trend. This surge in demand is largely due to geopolitical tensions, inflationary pressures, and economic uncertainties, making gold an attractive safe-haven and inflation hedge. Globally, gold demand rose 3% year-on-year in Q2 2025 to about 1,249 metric tons, accompanied by a 26% price jump to over $3,500 per ounce earlier in the year.
Surging investment demand, especially in gold ETFs and bars/coins, has been a key driver. ETF inflows reached 170 tons in Q2 2025, and bar/coin investment increased by 11% year-on-year, with Asian investors leading the charge. Central banks have also continued substantial gold purchases, forecasted to amount to around 900 tons in 2025, as they diversify their reserves away from the U.S. dollar amidst geopolitical and trade uncertainties.
The UK market has also shown signs of increasing demand. European net investment in gold more than doubled in Q2 2025 to 28 tons, indicating strengthening demand from Western markets including the UK. This reflects heightened risk aversion and the appeal of gold as a portfolio diversifier amid economic and geopolitical uncertainties impacting Europe.
The UK's appeal lies in the tax advantages gold offers. It is exempt from VAT, and gold bullion coins produced by the Royal Mint are not subject to capital gains tax. These factors make gold a smart, tax-efficient alternative in the face of economic uncertainty and mounting tax pressures.
Moreover, the London Bullion Market Association increased their forecasts for the average price of gold by 15.5% for the rest of the year. Gold outperformed almost all other major asset classes in the first half of the year, according to the World Gold Council, and total bar and coin investment rose 11% year on year, producing the strongest first half since 2013.
The trend of buying gold in the UK reflects a growing awareness of its unique tax advantages. The UK accounted for a 17% increase in demand for European-listed gold funds year on year in the second quarter. Switzerland also contributed significantly to demand for European-listed funds in the second quarter.
The World Gold Council's annual central bank survey shows 95% of reserve managers believe global central bank gold reserves will increase over the next 12 months. This underscores the global faith in gold as a safe haven in turbulent times.
In summary, the global rise in gold demand in 2025, including in the UK, is driven by investors and central banks seeking protection against inflation and geopolitical risks. Europe, particularly the UK, has shown strong growth in gold investment, fueled by bullish price expectations and macroeconomic uncertainties. The precious metal gold stands out as a smart, tax-efficient alternative in the face of economic uncertainty and mounting tax pressures.
Investors in the UK market are increasingly turning towards gold as a smart, tax-efficient alternative, given the unique tax advantages it offers, such as exemption from VAT and capital gains tax on gold bullion coins produced by the Royal Mint. This trend aligns with the global demand for gold, which has witnessed a 3% increase year-on-year in Q2 2025, driven by both investors and central banks seeking protection against inflation and geopolitical risks.
