Why gold demand stays strong despite record prices

Global demand for gold broke records in 2025 as investors rushed into the metal and prices surged to repeated all-time highs, according to new data from the World Gold Council.

Total gold demand crossed 5,000 tonnes for the first time, helped by heavy buying of bars, coins and gold-backed funds. The gold price set 53 new records during the year, lifting the total value of global gold demand to an unprecedented $555 billion.

Research analysts and market strategists at the World Gold Council described 2025 as a “groundbreaking year for gold,” driven mainly by investment demand and safe-haven buying. (Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

Investors drive gold record boom

Investment was the main force behind gold’s record year.

Global gold exchange-traded funds added 801 tonnes, the second-strongest year on record. Bar and coin buying climbed to a 12-year high, showing that both large investors and everyday buyers were turning to physical gold.

 “Safe-haven and diversification motives were consistent themes driving investment interest throughout the year,” the analysts at the World Gold Council said in the report.

They added that price momentum itself pulled more buyers into the market, reinforcing demand across investment products.

For UAE residents, this trend shows up clearly in retail activity. Bar and coin demand across the Middle East rose in 2025, with the UAE recording a year-on-year increase in physical investment buying.

Jewellery buys fell, spending rose

Record prices made jewellery harder to afford.

Global jewellery demand fell sharply in volume terms as buyers reduced how much gold they could purchase. Yet the total amount of money spent on gold jewellery still climbed to a record $172 billion, as higher prices more than offset lower volumes.

 “A decline in jewellery demand volumes was entirely expected in the environment of successive record gold price highs,” the WGC market strategists noted. They said interest in gold jewellery remained strong even as buyers adapted to higher prices.

In the Middle East, jewellery demand volumes declined, including in the UAE, where purchases eased as costs rose. Yet spending values moved higher, reflecting continued cultural and investment interest in gold despite affordability pressures.

For many buyers, this meant choosing lighter pieces, trading old jewellery for new, or shifting part of their budget into small bars and coins.

Central banks stayed big buyers

Another major support came from central banks. Official institutions bought 863 tonnes of gold during 2025. While slightly lower than the previous two years, purchases remained historically high and spread across many countries.

“Central bank purchases remain historically elevated and geographically widespread,” the research analysts added. Their continued buying reinforced gold’s role as a reserve asset during a year marked by geopolitical tension, market volatility and currency uncertainty.

How this impacts UAE gold buyers

For UAE residents, the numbers reflect what many have already felt in shops and trading platforms.

Gold jewellery costs more, so buyers are purchasing less weight or turning to exchanges and upgrades. At the same time, interest in small bars, coins and digital gold products continues to grow as people look for ways to protect savings.

The World Gold Council expects investment demand to remain strong into 2026, supported by global uncertainty and ongoing central bank buying, while jewellery volumes may stay under pressure if prices remain high.

For everyday buyers, the message is simple. Gold is no longer just an ornament. For many in the UAE, it is increasingly a financial decision.

GN