Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Central banks and exchange-traded funds (ETFs) continued to be the main drivers of gold demand in the third quarter of 2026, even as high prices weighed on jewellery consumption, according to the quarterly report of the World Gold Council (WGC).
Central bank buying jumped to 321 tonnes in Q3, eclipsing recent typical quarterly buying levels and lifting total purchases to 675 tonnes in the first nine months of the year, up 6% year-on-year.
Gold ETFs reversed course following the second-quarter outflows, adding 211 tonnes of gold during Q3. The inflows appeared to be driven by mounting concerns over fiscal sustainability and inflation, among other factors, the WGC report said.
Commenting on the report, Dhaval Jasani, financial markets researcher and Chartered Accountant, said: “The Q3 WGC data confirms that gold is now an institutional and sovereign story rather than a retail one. Central bank buying of 321 tonnes, well above the five-year quarterly average of 227 tonnes, and record ETF holdings of 4,256 tonnes show that diversification and fiscal-risk hedging are driving demand, not price-chasing.”
Total global gold demand, including over-the-counter (OTC) transactions and other demand, stood at 1,369 tonnes in the third quarter, down 1% from the corresponding period last year. Demand for the first nine months reached 3,881 tonnes, virtually matching the record 3,884 tonnes in the same period of 2025.
The value of demand during the nine-month period reached a record $566 billion.
Investment demand, comprising gold bars, coins and ETFs, reached 479 tonnes during the quarter, down 14% year-on-year but up 83% from the previous quarter.
Within this category, gold bar and coin demand fell 19% year-on-year to 268 tonnes as investors awaited a clearer direction in prices. Demand for gold bars stood at 203 tonnes, while official coins accounted for 35 tonnes and medals and imitation coins for nearly 30 tonnes.
ETF holdings increased by 211 tonnes to a record 4,256 tonnes, with the funds attracting a record $31 billion in quarterly inflows. European-listed ETFs led the increase, adding 92 tonnes.
Jasani said demand for bars, coins and ETFs also reflected growing interest in regulated, tax-efficient gold exposure. Funds, special purpose vehicles (SPVs) and compliant trading structures in jurisdictions such as the UAE, Mauritius and Singapore were well placed to benefit from this trend, he added.
Central banks and other institutions purchased 321 tonnes of gold, a 42% increase from 226 tonnes in the third quarter of 2025 and 8% higher than the previous quarter.
The WGC said central bank purchases remained above the five-year quarterly average of 227 tonnes, with diversification and risk management continuing to influence demand. China and Poland were among the largest reported buyers.
Jewellery consumption, meanwhile, declined 17% year-on-year to 313 tonnes, its weakest third-quarter level in the WGC's data series dating back to 2000. However, the value of jewellery consumption increased 2% to $43 billion, reflecting elevated gold prices.
In the UAE, gold jewellery consumption fell to 4.5 tonnes in the third quarter, compared with 5.6 tonnes in the preceding quarter and 6.4 tonnes in the corresponding period last year.
This represented declines of 19% quarter-on-quarter and 29% year-on-year, respectively.
The UAE decline was consistent with the broader Middle Eastern trend, where jewellery consumption fell 22% year-on-year to 26.2 tonnes. Saudi Arabia recorded consumption of 8.2 tonnes, down 12%, while Kuwait's demand declined 29% to 1.7 tonnes.
Globally, India consumed 99.9 tonnes of gold jewellery, down 20% year-on-year, while mainland China's consumption declined 22% to 65.7 tonnes.
The WGC attributed the weakness in jewellery consumption to persistently high prices, which encouraged buyers in several markets to favour lighter-weight, smaller and lower-carat products.
Jasani said the weakness in jewellery consumption reflected the sensitivity of demand to higher prices rather than a fundamental loss of consumer appetite for gold.
“The weakness in jewellery is a price-elasticity effect, not a loss of appetite,” Jasani said, pointing out that consumption volumes fell 17% even as the value of purchases increased 2%.
“For UAE jewellers and traders, margin management, product mix and inventory planning will matter more than volume growth,” he added.
Gold used in technology increased 3% year-on-year to 84.8 tonnes, supported by demand from artificial intelligence-related manufacturing.
On the supply side, global gold mine production increased 3% year-on-year to 1,071 tonnes, a third-quarter record. Recycled gold supply declined 8% to 314.5 tonnes, its lowest quarterly level in three years.
After accounting for net producer de-hedging of 16.8 tonnes, total gold supply stood at 1,369 tonnes, down 1% year-on-year.
The average LBMA gold price during the quarter stood at $4,262 per ounce, 23% higher than the corresponding period last year, although it was 5% lower than the preceding quarter.
Jasani noted that gold closed near $4,087 per ounce on November 6, approximately 4% below the third-quarter average but still about 18% above the average recorded in the corresponding quarter last year.
“After the October correction, this looks like healthy consolidation. Sustained official-sector buying and investment inflows should continue to underpin the medium-term trend,” Jasani said.
Looking ahead, the WGC expects investment demand to remain the principal source of annual gold demand growth in 2026, with central bank purchases likely to at least match the previous year's level.
