Bar and coin demand drives gold market as central banks stay resilient amid geopolitical strain – WGC
The gold market saw modest growth in volumes but a surge in value in the first quarter of 2026, as investors piled into physical bullion, while central bank buying remained relatively healthy despite new volatility, according to the latest report from the World Gold Council.
Total gold demand, including over-the-counter activity, rose 2% year-over-year to 1,231 tonnes in the first three months of the year, according to the WGC’s Quarterly Trends Report. At the same time, because of the precious metal’s unprecedented rally at the start of the year, the value of the increased activity jumped 74% to a record $193 billion.
The report noted that retail investment demand continued to play a dominant role in the marketplace, particularly in physical bullion. Bar and coin demand jumped 42% year-over-year to 474 tonnes — the second-highest quarterly level on record.
“Much of the demand strength was concentrated in January as the price rally gained momentum. Nevertheless, buying continued throughout the quarter, with some investors buying into the price correction,” the analysts said.
The analysts said that strong bullion demand was fueled by inflation concerns, currency weakness, and limited alternative investment options. Asian investors remained dominant players in the marketplace, as Chinese bar and coin demand hit a record quarter, while India also saw its strongest first quarter in more than a decade.
At the same time, ETF demand remained positive but lost momentum compared to last year, with modest inflows of 62 tonnes as U.S. funds saw outflows later in the quarter.
While investment demand has been a commanding presence in the gold market, central banks continue to play an important supporting role. The WGC said that central bank purchases in the first quarter were stronger than expected, with central banks purchasing 243.7 tonnes in the first quarter, up 3% from a year earlier.
“Demand exceeded both the previous quarter and the five-year average, underscoring continued commitment to strengthening reserves with gold,” the analysts said in the report. “During the quarter, central banks had to contend with heightened uncertainty on multiple fronts.”
The WGC said this steady buying underscores gold’s strategic role in reserves, even as global markets experienced heightened volatility tied to geopolitical tensions, including the ongoing conflict involving Iran.
The report also highlighted a notable increase in selling activity during the quarter, reflecting the growing need for liquidity in some regions. Since the new conflict in the Middle East started, several central banks have been forced to monetize their gold reserves to manage financial pressures due to the global supply-chain crisis in the energy market.
“Gold [continues] to perform its role as an indispensable reserve asset that is accessible during times of extreme market turbulence,” the WGC said, even as some institutions increased tactical selling.
The WGC added that while short-term selling may continue in response to market stress and liquidity needs, central bank demand is expected to remain robust through 2026, supported by ongoing geopolitical risks and a shifting global financial landscape.
The WGC noted that even jewelry demand, which has been a weakness in the marketplace, saw some positive highlights in the first quarter.
Total jewelry demand dropped to 299.7 tonnes in the first quarter, the lowest level since the second quarter of 2020. However, the value of jewelry bought at the start of the year rose by 31% to $47 billion, a record high.
The fact that consumers are spending more money on smaller pieces is an indication of ongoing positive sentiment toward gold jewellery, they noted.
Looking ahead, the WGC expects both investment demand and central bank buying to remain key drivers of the gold market. Elevated inflation, persistent geopolitical tensions, and continued volatility in financial markets are likely to keep gold attractive as a hedge.
“Geopolitics remain front and centre in our outlook for gold demand,” the WGC said, adding that investment and central bank demand “will be supported by ongoing geopolitical risk.”
Bar and coin demand, in particular, is expected to remain strong as investors continue to favor physical assets in an uncertain environment.
At the same time, central banks are likely to maintain elevated levels of buying, even as some institutions intermittently tap their reserves to manage economic shocks.
The WGC is maintaining its forecast that central banks will buy between 700 and 900 tonnes of gold this year, in line with activity seen in 2025, but down from the preceding three years, which saw global reserves increase by more than 1,000 tonnes.
