Gold Demand Soars to 1,249 Tonnes in Q2 2025 Amid Geopolitical Uncertainty

Commodity

Summary:

The World Gold Council’s Q2 2025 Gold Demand Trends report reveals that total quarterly gold demand reached 1,249 tonne globally, a 3% increase year-on-year amid a high price environment.

The World Gold Council’s Q2 2025 Gold Demand Trends report reveals that total quarterly gold demand reached 1,249 tonne globally, a 3% increase year-on-year amid a high price environment. Strong gold investment flows largely fuelled quarterly growth, as an increasingly unpredictable geopolitical environment and price momentum sustained demand.

Gold ETF investment remained a key driver of total demand, with inflows of 170 tonne over the quarter, compared with small outflows in Q2 2024. Asian-listed funds were major contributors at 70t, keeping pace with US flows. Combined with record inflows in Q1, global gold ETF demand reached 397tonne , the highest first half total since 2020.

Total bar and coin investment also increased 11% year-on-year, adding 307 tonne. Chinese investors led the way with a notable 44% year-on-year increase to 115t, while Indian investors continued to add to their holdings, totalling 46 tonne in Q2. Divergent trends emerged in Western markets as European net investment more than doubled to 28t while US bar and coin demand halved to 9t in the second quarter.

Central banks continued to buy, albeit at a slower pace, adding 166t in Q2 2025. Despite this deceleration, central bank buying remains at significantly elevated levels due to ongoing economic and geopolitical uncertainty. WGC's annual central bank survey shows that 95% of reserve managers believe that global central bank gold reserves will increase over the next 12 months.

Jewellery demand continued to decline with the volume of consumption down 14% and nearing low levels last seen in 2020 during the COVID pandemic. Jewellery demand in China was down 20% and Indian demand fell 17% year-on-year. However, in value terms the global jewellery market increased to a total of US$36bn.

Total gold supply increased 3% to 1,249 tonne, with mine production up marginally to a new second quarter record. Recycling increased 4% year-on-year but stayed relatively subdued considering the high price environment.

Louise Street, Senior Markets Analyst at the World Gold Council, commented: “Global markets have navigated a volatile start to the year marked by trade tensions, unpredictable US policy shifts and frequent geopolitical flashpoints. The robust investment activity we have seen in the first half of 2025 underscores gold's role as a hedge against economic and geopolitical risks. Ongoing market volatility, coupled with gold's impressive price performance in recent months, has also generated significant momentum, drawing capital from investors around the globe."

“Gold recorded a remarkable 26% appreciation in the first half of the year in dollar terms, outperforming many major asset classes. With such an impressive start to the year, it is possible that gold could trade within a relatively narrow range in the latter half of 2025. On the other hand, the macroeconomic environment remains highly unpredictable, which may underpin further gains for gold. Any material deterioration in global economic or geopolitical conditions could further amplify gold’s safe-haven appeal, potentially pushing prices are still higher.”

Source: Kitco

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Adam

Economic

December 2024 marked the second-to-last time there was a dissent by an FOMC voting member. The dissent, at the time, was a sole vote by Jefferey Schmid against cutting rates. The last dissent was yesterday. While the Fed voted to maintain the Fed Funds rate at 4.25-4.50%, Michelle Bowman and Christopher Wallace cast dissenting votes in favor of reducing rates.

Such was the first time two members dissented since 1993, as shown below. The two dissenting votes at yesterday’s meeting inform us that the tide is turning, and the rationales for not cutting rates are fading.

The Fed made two changes to its statement from six weeks ago as follows:

Replaced “economic activity has continued to expand at a solid pace” with “growth of economic activity moderated in the first half of the year“

Removed “diminished” from “uncertainty about economic outlook has diminished but remains elevated“

In our opinion, the changes to the statement and the dissent votes point to slightly more dovish messaging by the Fed. Based on the market reaction, the markets do not agree with our take. In a section below, we share some quotes and commentary from Powell’s press conference.

Split Decision at the Fed Rekindles Debate Over Timing of Rate Cuts_1

When Powell Speaks, Investors Listen

The following bullet points are from Jerome Powell’s post-FOMC press conference:

The economy is not acting like policy is restrictive; thus, according to Powell, current monetary policy seems appropriate. That said, he recognizes “downside risks to the labor market are certainly apparent.”

Labor market growth is slow, but it’s tempered as the workforce shrinks due to immigration policies. Thus, Powell believes the labor market is “balanced.”

In regards to a potential September rate cut: “We have made no decisions about the September meeting.”

The dissent votes resulted in good discussions about monetary policy at the meeting.

Powell thinks it’s too early to evaluate how tariffs will impact inflation. He believes the process will be slower than they initially thought. He still thinks it’s reasonable to assume these will be “one-time price effects.” “We will make sure this doesn’t turn into serious inflation.“

Services inflation is offsetting goods inflation due to tariffs.

Interestingly, he said they “could look through inflation by not hiking.” “A pretty reasonable base case is that this will be a one-time price increase.”

The Fed Funds futures market trimmed the odds of a September rate cut from 68% to 47%. In other words, the market thinks the statement and press conference were slightly hawkish.

Source: investing

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PIMCO

Economic

Forex

Political

While not all details have been ironed out, we have a good idea of what the U.S.–EU trade agreement will look like following the recent announcements. The main contours of the deal are as follows:

● The U.S. will charge a 15% tariff rate on the vast majority of EU goods. Key exceptions are steel and aluminium (where the tariff rate will remain at 50%) and aircraft, plus some other goods where the tariff will be zero. Autos, semiconductors, and pharmaceuticals also appear to be subject to the 15% tariff, which is positive given fears of more unfavorable treatment of these sectors.

● The EU commits to 1) make $750 billion of energy purchases from the U.S. during President Trump’s tenure, 2) make $600 billion of investments into the U.S. (an unclear commitment that will rely on uncertain private sector investment decisions), and 3) purchase a yet unspecified amount of U.S. military equipment.

● The EU will refrain from retaliating against the trade measures introduced by the U.S.

The agreed 15% tariff is largely in line with our assumptions and removes the outlier risks of a more adverse outcome. Even so, according to our modelling, the trade restrictions will likely weaken eurozone growth by around 1 percentage point over the next few quarters, bringing growth to a near halt during the second half of this year.

Around half of that impact is due to the direct effect of tariffs on net trade, while the other half is linked to how trade policy uncertainty tends to curtail corporate investments. But the drag caused by the latter effect is difficult to estimate as we have only 2018–2019 (i.e., trade policy actions by the first Trump administration) as a relatively recent template. What’s more, global trade uncertainty actually has decreased of late, according to a widely tracked measure constructed by Federal Reserve researcher Matteo Iacoviello.

Notably, the eurozone economy has not shown meaningful signs of slowdown so far this year, with GDP growth averaging more than 1% in annualized terms through the first half of the year and with the composite purchasing managers’ index (PMI) ticking up in July despite rising trade tensions. Still, it’s early days for economic effects to be felt, and much of the recent resilience is likely linked to U.S. import front-loading in advance of Trump’s August tariff deadline. We continue to expect a deceleration in euro area growth throughout the remainder of the year.

The expected slowdown, and our assessment that near-term inflation risks are tilting to the downside due to a weaker economy, slowing wage growth, and a stronger currency – are factors underpinning our expectation that the European Central Bank (ECB) has potentially more policy easing to do. We believe the ECB could lower the policy rate one more time to a terminal rate of 1.75% – a level not far from current money market pricing – but upcoming data will be key to determining the policy path ahead.

At the ECB’s 24 July monetary policy meeting, President Christine Lagarde stressed that ECB policy is currently in a “good place.” This is not surprising given growth running close to trend, inflation being close to target, and the policy rate being at a level the ECB considers to be neutral. Arguably, the central bank also wants to minimize the risk of having to reverse course shortly after reaching the terminal rate.

Investment implications

With ECB rate expectations largely priced into markets, we believe European bonds still offer an attractive hedge for investors bracing for Europe’s economic headwinds. We favor short- to medium-term maturities, given anchored front-end rates and elevated longer-term rates (the latter largely due to Germany’s fiscal push plus the ECB’s balance sheet unwind).On the currency front, the euro’s recent rally against the U.S. dollar looks set to continue, but that story is more about dollar weakness than euro strength.We also see significant opportunities in well-structured and defensive spread sectors throughout the eurozone, which – through appropriate name and sector selection – offer the potential for compelling risk-adjusted returns with lower volatility relative to equities.

Source: PIMCO

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Michelle

Economic

Commodity

The once-mighty premium US copper enjoyed over the global benchmark slid on Thursday as markets clawed back months of gains in hours of frenzied trading after President Donald Trump surprised markets with pared-back tariffs.

Trump said on Wednesday the United States would impose a 50% tariff on copper pipes and wiring, but the levy fell short of the sweeping restrictions expected and left out copper ores, concentrates and cathodes.

The surprise move dragged down US copper prices more than 20% on the Comex exchange HGc2 and unwound the premium over the London global benchmark CMCU3 that had grown in recent weeks, with shipments diverted into the United States in anticipation of higher domestic prices.

"We think the LME flips to a premium in the short term due to excess inventories in the US," Anant Jatia, founder and chief investment officer at Greenland Investment Management, a hedge fund specialising in commodity arbitrage trading, told Reuters.

"Over time Comex moves back to a premium as inventories draw and downstream tariffs leave a sustained US premium."

US September Comex copper futures HGc2 were last down 22% at US$4.376 a lb or US$9,647 a metric ton on Thursday, meaning a premium over LME copper of US$27 a ton.

This compares with last week's premium of US$3,000. Benchmark LME copper CMCU3 fell 0.8% to US$9,620.50 a ton.

What will happen to US inventories?

Months of hefty premiums had sucked in enormous volumes of copper from around the world since Trump first flagged the possibility of tariffs in February.

As recently as a few weeks ago, traders were still redirecting cargoes to the United States in a rush to get copper into the country before the tariffs.

Trump first teased the tariff in early July, implying that it would apply to all types of the red metal, ranging from cathodes produced by mines and smelters to wiring and other finished products.

Data provider Kpler said that 99,170 tons of copper were delivered by bulk carriers to the US since July 8, when Trump said he would announce a 50% tariff on copper and his team added that the probable deadline would be August 1. This brought US March-July copper imports to more than 550,000 tons.

Since the July 8 announcement only one vessel managed to leave its port of origin and deliver the cargo to the US in time, according to Kpler. The vessel brought 14,998 tons of cathodes to a port in Hawaii.

Yet in a proclamation released by the White House, the administration said the tariff starting this Friday will apply only to pipes, tubes and other semi-finished copper products, as well as products that copper is heavily used to manufacture, including cable and electrical components.

Trump's unexpected pivot now raises the question of whether some of the US stockpile might be re-exported. Macquarie estimated earlier this month it would take nine months of normal consumption just to run down the inventories built up in the first half of the year.

Goldman Sachs said in a note on Thursday that Trump's threat to potentially impose tariffs on refined copper in 2027 would keep US and global prices near parity and limit any large scale re-exporting.

Source: Theedgemarkets

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Adam

Economic

Here are five key things investors need to know to start the trading day:

Going steady

The Federal Reserve kept the key funds rate unchanged, but it wasn’t a unanimously welcome move within the central bank. Fed members Michelle Bowman and Christopher Waller dissented, marking the first time in more than three decades that a decision got multiple “no” votes. Though investors had largely anticipated the announcement, stocks tumbled as Chair Jerome Powell said there wasn’t a clear decision on what the central bank would do at the next policy gathering in September. However, stock futures climbed on Thursday morning — follow live market updates here.

Heavy metal

While Fed-heads were locked in on the meeting Wednesday afternoon, President Donald Trump imposed a 50% tariff on copper imports, beginning Friday. With that, copper is in the same boat as steel and aluminum at the 50% levy rate. Later in the day, Trump announced a deal with South Korea that will set tariffs at 15%. Remember: All this action takes place as the clock counts down to Friday, which is when the White House said it will start requiring tariff payments.

Big Tech’s beats

It’s a good morning to be a megacap tech investor. Meta and Microsoft earnings both beat Wall Street’s earnings expectations, sending the pair of stocks jumping in extended trading. Notably, Microsoft’s after-hour rally sent the stock’s market cap above $4 trillion, making it the only name besides Nvidia to sit above this elite threshold. Investors don’t have to wait long for the next round of Magnificent Seven reports, as Apple and Amazon

are both scheduled for after Thursday’s closing bell.

A ‘resilient’ economy

With the Fed in the rearview, attention now turns in full force to the economic data on the docket this week. Economic data released Wednesday brought good news, with private payrolls swinging back to expansion and the GDP rising at a higher rate than economists forecast for the second quarter. Heather Long, chief economist at Navy Federal Credit Union, went so far as to name “resilient” the word of the summer economically. Now, the question is if the rest of the week’s releases will paint a similarly rosy picture. There will be a lot to follow, with both inflation data and the all-important jobs report coming in the backend of the week.

Canned confusion

If you opened a High Noon box recently to find energy drink cans, rest assured, you aren’t alone. High Noon said it was recalling some of its 12-packs for a can branding issue. The box itself was branded correctly, and the drinks inside the cans were, indeed, a vodka seltzer. The problem: The cans themselves have the branding of energy drink Celsius rather than High Noon’s.

Source: cnbc

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Warren Takunda

Economic

Federal Reserve Chair Jerome Powell gave little indication on Wednesday of bowing anytime soon to President Donald Trump's frequent demands that he cut interest rates, even as signs of dissent emerged on the Fed's governing board.

The Fed left its key short-term interest rate unchanged for the fifth time this year, at about 4.3%, as was expected.

But Powell also signalled that it could take months for the Fed to determine whether Trump's sweeping tariffs will push up inflation temporarily or lead to a more persistent bout of higher prices. His comments suggest that a rate cut in September, which had been expected by some economists and investors, is now less likely.

“We've learned that the process will probably be slower than expected,” Powell said. “We think we have a long way to go to really understand exactly how” the tariffs will affect inflation and the economy.

There were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while nine officials, including Powell, opted to keep rates steady. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.

The choice to hold off on a rate cut will almost certainly result in further conflict between the Fed and White House, as Trump has repeatedly demanded that the central bank reduce borrowing costs as part of his effort to assert control over one of the few remaining independent federal agencies.

Future rate trajectory

Powell has in the past signalled during a news conference that a rate move might be on the table for an upcoming meeting, but he gave no such hints this time. The odds of a rate cut in September, according to futures pricing, fell from nearly 60% before the meeting to just 45% after the press conference, the equivalent of a coin flip, according to CME Fedwatch.

“We have made no decisions about September,” Powell said. The chair acknowledged that if the Fed cut its rate too soon, inflation could move higher, and if it cut too late, then the job market could suffer.

Major US stock indexes, which had been trading slightly higher Wednesday, went negative after Powell's comments.

“The markets seem to think that Powell pushed back on a September rate cut,” said Lauren Goodwin, chief market strategist at New York Life Investments.

Powell also underscored that the vast majority of the committee agreed with a basic framework. Inflation is still above the Fed's target of 2%, while the job market is still mostly healthy, so the Fed should keep rates elevated.

On Thursday, the government will release the latest reading of the Fed's preferred inflation gauge, and it is expected to show that core prices, excluding energy and food, rose 2.7% from a year earlier.

Gus Faucher, chief economist at PNC Financial, says he expects the tariffs will only temporarily raise inflation, but that it will take most of the rest of this year for that to become apparent. He doesn't expect the Fed to cut until December.

Trump argues that because the US economy is doing well, rates should be lowered. But unlike a blue-chip company that usually pays lower rates than a troubled start-up, it's different for an entire economy.

The Fed adjusts rates to either slow or speed growth, and would be more likely to keep them high if the economy is strong to prevent an inflationary outbreak.

Earlier Wednesday, the government said the economy expanded at a healthy 3% annual rate in the second quarter, though that figure followed a negative reading for the first three months of the year, when the economy shrank 0.5% at an annual rate.

Most economists averaged the two figures to get a growth rate of about 1.2% for the first half of this year.

Supporters of faster cuts

The dissents from Waller and Bowman likely reflect jockeying to replace Powell, whose term ends in May 2026. Waller in particular has been mentioned as a potential future Fed chair.

Michael Feroli, an economist at JPMorgan Chase, said in a note to clients this week if the pair were to dissent, “it would say more about auditioning for the Fed chair appointment than about economic conditions".

Bowman, meanwhile, last dissented in September 2024, when the Fed cut its key rate by a half-point. She said she preferred a quarter point cut instead, and cited the fact that inflation was still above 2.5% as a reason for caution.

Waller said earlier this month that he favoured cutting rates, but for very different reasons than Trump has cited: Waller thinks that growth and hiring are slowing, and that the Fed should reduce borrowing costs to forestall a rise in unemployment.

There are other camps on the Fed’s 19-member rate-setting committee — only 12 of the 19 actually vote on rate decisions. In June, seven members signalled that they supported leaving rates unchanged through the end of this year, while two suggested they preferred a single rate cut. The other half supported more reductions, with eight officials backing two cuts, and two, widely thought to be Waller and Bowman, supporting three reductions.

The dissents could be a preview of what might happen after Powell steps down, if Trump appoints a replacement who pushes for the much lower interest rates the White House desires. Other Fed officials could push back if a future chair sought to cut rates by more than economic conditions would otherwise support.

Overall, the committee’s quarterly forecasts in June suggested the Fed would cut twice this year. There are only three more Fed policy meetings, in September, October, and December.

When the Fed cuts its rate, it often — but not always — results in lower borrowing costs for mortgages, auto loans and credit cards.

Some economists agree with Waller's concerns about the job market. Excluding government hiring, the economy added just 74,000 jobs in June, with most of those gains occurring in health care.

“We are in a much slower job hiring backdrop than most people appreciate,” said Tom Porcelli, chief US economist at PGIM Fixed Income.

Source: Euronews

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Michelle

Economic

Forex

The United States believes it has the makings of a trade deal with China, but it is "not 100% done," US Treasury Secretary Scott Bessent said on Thursday.

US negotiators "pushed back quite a bit" over two days of trade talks with the Chinese in Stockholm this week, Bessent said in an interview with CNBC.

"I believe that we have the makings of a deal," Bessent said.

China is facing an August 12 deadline to reach a durable tariff agreement with Trump's administration, after Beijing and Washington reached preliminary deals in May and June to end escalating tit-for-tat tariffs and a cut-off of rare earth minerals.

Bessent said he and US Trade Representative Jamieson Greer will speak to President Donald Trump later on Thursday about the August 12 deadline.

"There's still a few technical details to be worked out on the Chinese side between us. I'm confident that it will be done, but it's not 100% done, he said.

Many countries are rushing to cut deals ahead of August 1, when Trump has promised higher tariffs will kick in.

On India, Bessent said he did not know what would happen in trade talks, citing India's dealings with Russia. "They have not been a great global actor."

Asked if movement was possible before the Friday deadline, Bessent said: "I don't know what's going to happen. It will be up to India. India came to the table early. They've been slow rolling things. So I think that the president, the whole trade team, has been frustrated with them."