LONDON (Reuters) -Global gold demand including over-the-counter (OTC) trading rose by 3% year-on-year to 1,248.8 metric tons in the second quarter of 2025 as investment jumped 78%, the World Gold Council said on Thursday.

Spot gold prices are up 26% so far this year after hitting a record $3,500 per troy ounce in April as uncertain global trade policy and geopolitical turbulence fuelled inflows into safe-haven assets.

Demand for gold bars rose 21% in the second quarter, offsetting a continuing slump in demand for coins, said the WGC, an industry body whose members are global gold miners.

Physically backed gold exchange-traded funds recorded their largest semi-annual inflow since the first half of 2020 from January to June, the WGC said earlier in July.

Global gold jewellery consumption, the main category of physical demand, fell 14% to 341.0 tons, the lowest level since the pandemic-swept third quarter of 2020, as the high prices deterred buyers.

"Much of the decline came from China and India, whose combined market share fell below 50% for only the third time in the last five years," the WGC said.

Central banks, another major source of gold demand, reduced purchases by 21% to 166.5 tons in the second quarter, the WGC calculated, based on reported purchases and an estimate of unreported buying.

On the supply front, recycling added 4% to 347.2 tons in the second quarter, but remained relatively subdued despite record prices, as Indian consumers opted to exchange old jewellery for new, or to pledge it as collateral against loans.

The WGC downgraded its estimate of this year's gold purchases by central banks, adding that the longer-term trend of central banks reallocating from the U.S. assets to gold remains intact.

Gold ETFs have further upside potential in the second half of this year with retail investment due to soften modestly, the WGC added.

Gold supply and demand by WGC*:

Q2'24 Q1'25 Q2'25 Q2'25

change

y/y %

TOTAL SUPPLY 1,210.0 1,174.5 1,248.8 3

Mine production 896.2 833.0 908.6 1

Net producer hedging -20.4 -7.1 -7.1

Total mine supply 875.8 825.9 901.5 3

Recycled gold 334.2 348.5 347.2 4

TOTAL DEMAND 1,210.0 1,174.5 1,248.8 3

Jewellery fabrication: 417.2 425.4 356.7 -14

- Jewellery consumption 395.6 383.4 341.0 -14

- Jewellery inventory 21.6 42.0 15.7 -27

Technology: 80.2 80.4 78.6 -2

- Electronics 66.8 67.0 65.8 -2

- Other industrial 11.1 11.3 10.8 -3

- Dentistry 2.3 2.1 2.1 -9

Investment: 268.1 551.2 477.2 78

- Total bar and coin: 275.2 324.6 306.8 11

of which bars 200.2 257.7 243.1 21

of which official coins 49.6 44.3 38.9 -22

of which medals 25.4 22.7 24.8 -3

- ETFs/similar products -7.1 226.6 170.5

Central banks/institutions 211.5 248.6 166.5 -21

Gold demand 977.0 1,305.6 1,079.0 10

OTC and other 233.0 -131.2 169.8 -27

LBMA gold price ($/oz) 2,338.2 2,859.6 3,280.4 40

*Source: Metals Focus, ICE Benchmark Administration, World Gold Council.