Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The World Gold Council estimates that physical gold holdings by investors and central banks globally are worth roughly $5.1 trillion, while an additional $1 trillion worth of gold is traded through derivatives in exchange-traded and over-the-counter markets.
Trading volumes averaged around $200 billion per day in 2024, the WGC said in its latest report titled Gold in the Global Economy: Market, Mining and Modernisation.
The report examines the dynamics behind gold supply and demand, how gold is used and the contribution it makes to the global economy.
In recent years, annual gold consumption has climbed to almost 5,000 tonnes, fuelled by demand from consumers, investors, central banks and industrial users. Yet supply is increasing by little more than 1.5% per year, providing what the report describes as a favourable long-term backdrop for the market.
Around three-quarters of this ongoing demand is met through newly mined gold, equivalent to more than 3,500 tonnes annually.
The introduction of Exchange-Traded Funds (ETFs) in 2002 has played a pivotal role in reshaping investment patterns.
These products made gold easier and more cost-effective to access, creating an ETF market now valued at more than $300 billion. According to the report, ETFs have transformed gold from a traditionally physical asset into one that can be traded with the liquidity and efficiency of mainstream financial instruments.
Over the past half-century, gold has delivered average annual returns of 8%, outperforming several major asset classes, including bonds. The trend has been consistent over three-, five-, 10- and 20-year periods, and performance has been even stronger recently.
Gold prices rose 26% in the first half of 2025, making it one of the best-performing assets across global financial markets.
Central-bank demand remains a powerful driver of the market. Concerned about vulnerabilities in the global financial system, monetary authorities have been net buyers of gold for more than 15 years, accumulating over 7,000 tonnes in that period. Today, central banks account for around 20% of annual gold demand.
In the first half of 2025 alone, they purchased more than 415 tonnes, despite elevated prices. While the pace of buying has moderated, the outlook for further accumulation remains strong.
Jewellery remains a major source of demand, accounting for around 33% of annual gold consumption.
The report highlights that jewellery purchases tend to be more sensitive to rising prices relative to investment demand. In 2024, demand fell 11% in volume terms to just over 2,100 tonnes, largely due to a slump in China, leaving India as the world’s largest jewellery market for the second time in three years.
But despite lower volumes, the value of global jewellery demand rose 9% to a record $144 billion, supported by soaring gold prices.
Gold is also vital to the technology sector, accounting for about 7% of total demand. In 2024, technology companies used 326 tonnes of gold, up 7% year-on-year. Much of the increase came from high-end artificial intelligence infrastructure — including memory chips, processors and sensors.
Gold’s superior conductivity and resistance to corrosion make it essential in these components, and the report notes that demand will continue rising as AI becomes increasingly central to modern technology.
The mining industry is a critical pillar of the gold ecosystem, supplying most of the world’s physical gold. But mining industry confronts challenges around trust, transparency and sustainability.
The report emphasises that new technologies, advanced data systems and digital traceability tools can help the industry address these pressures.
The WGC report says gold mining and industry is at a “critical point”: record gold demand on one hand and rising expectations from regulators, institutional investors and consumers on the other. Stakeholders are calling for improved environmental outcomes, stronger community relationships, removal of illicit trade and greater transparency from mine to market.
One of the highest-risk segments of the global supply chain is artisanal and small-scale gold mining (ASGM). The report notes that ASGM has grown from about 4% of global output 20 years ago to approximately 20% today, driven by high prices, limited rural economic opportunities and the low cost of entry.
Despite its economic importance, a large proportion of ASGM takes place outside formal legal and regulatory systems. This raises serious concerns around environmental degradation, hazardous working conditions, illicit activity and mercury use — the latter prompting global responses such as the Minamata Convention on Mercury.
Additionally, frameworks such as the OECD Due Diligence Guidance on Responsible Sourcing of Minerals have heightened scrutiny of supply chains linked to ASGM, particularly in regions with risks of conflict financing or human-rights violations.
The report concludes that the future of the gold industry depends on aligning technological innovation with stronger governance and credible assurance systems. Blockchain-based traceability, real-time environmental monitoring and improved data reporting are among the initiatives now emerging.
Gold that can prove its origin, integrity and sustainability, the WGC argues, will have a strengthened position as a credible, resilient asset in the global financial landscape.
