Gold demand hit record highs in the third quarter, mainly due to significant ETF inflows of 222 tons and over 300 tons in purchases of bars and coins. Although there was a temporary price drop of USD 500 from its peak in October, gold is still seen as a safe haven. The World Gold Council indicates strong demand fueled by favorable investment conditions. Central banks and institutions bought 220 tons of gold in the third quarter, an increase of 28% from the previous quarter and 10% from last year. About two-thirds of these purchases were not reported. For 2023, central bank gold acquisitions are expected to be between 750 and 900 tons, a decrease compared to recent years but still higher than pre-2022 levels.

Jewellery Demand Decline

High gold prices continue to lower jewellery demand, which has fallen for the sixth straight quarter. China shows some resilience, while India’s jewellery demand dropped by 31% from last year, falling to 118 tons—the lowest for a third quarter since 2020. The steep price drop from the record high on October 20, 2025, has caused significant short-term market fluctuations. While this just erased previous month’s gains, it shows that the rise is not straightforward. We view this as a healthy pause before the next significant move, creating opportunities for those ready to trade. Investor interest is maintaining price stability, with ETF inflows reaching a record 222 tons in the third quarter. Recent data shows that SPDR Gold Shares (GLD) had its largest net inflow since the banking issues in spring 2024. This suggests that long-term investors are taking advantage of any price drops to buy.

Central Bank Purchases

It’s essential to note the consistent buying from central banks, which added 220 tons in the third quarter. The fact that many of these purchases are unreported indicates a strategic move towards gold, likely due to geopolitical risks. This institutional demand helps prevent a significant price decline. The main challenge remains monetary policy, as comments after the last Federal Reserve meeting have raised doubts about a much-anticipated interest rate cut in December. With core inflation data for September slightly above expectations at 3.8%, the market now believes there’s a higher chance that rates will remain high. This uncertainty may limit any immediate sharp rally in gold prices. The interplay of strong demand and Fed-related uncertainty means gold options may see high implied volatility. Traders might consider strategies that benefit from significant price movements in either direction, such as long strangles, especially around key economic data releases in November. For those optimistic about gold, using bull call spreads on December or January contracts can help capture potential gains while clearly defining risks. Create your live VT Markets account and start trading now.

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