WGC: Gold demand faces East/West split in Q1 2026

Second highest quarter for bar and coin demand

Safe-haven demand for gold due to rising geopolitical tensions and economic stress led to massive buying of gold bars and coins by investors, pushing up the metal’s prices.

With purchases of 474 metric tons of gold bars and coins, Q1 2026 represents the second largest quarter for demand that this segment of the market has experienced.

Overall, demand for gold bars and coins in Q1 2026 was 11 percent higher than Q4 2025 and 42 percent higher than Q1 2025.

Asian markets led the way, particularly China and India, which were historically regional hot spots for investment demand for gold.

Notably, Chinese bar and coin purchases had the strongest quarter on record, reaching 207 MT, surpassing the previous Q2 2013 record of 155 MT.

The WGC attributed this in part to the Chinese government’s VAT reform policy on gold jewellery, which came into effect in late 2025, making jewelery more expensive and pushing investors towards bars and coins.

India also experienced strong demand for gold bars and coins, with demand from this segment increasing 34 percent year-on-year to 62 MT. This is the highest first quarter demand since 2013, and roughly equal to jewelry demand which typically exceeds demand for bars and coins by many times.

“I think overall, there was a lot of interest from the Indian market and the Chinese market,” Cavattoni told INN. “My feeling in terms of demand for bars and coins is that it remains a really big market around the world, especially in emerging markets.”

Looking at the US, this regional market experienced a 14 percent year-over-year increase in demand for gold bars and coins at 18.1 metric tons. However, this figure is 20 per cent less than the amount raised by investors in the previous quarter.

This was likely due to high gold prices, which slowed buying in February and early March before prices declined. The WGC shared that affordability has been a top priority for US gold investors, as reflected in the popularity of lightweight physical gold investment products.

Clear divide between East and West gold ETF demand

Total investment demand for gold in the first quarter of 2026 stood at 535.6 metric tons, which is 11 percent less than the fourth quarter of 2025 and 5 percent less than the first quarter of last year. Lack of investor appetite for gold exchange-traded funds (ETFs) was a primary driver, with a divergent trend emerging between the markets of Asia and the US.

During the quarter, gold ETF demand totaled 62 MT, marking the seventh consecutive quarter of increased holdings. However, this figure is a huge decline of 65 percent from the previous quarter and 73 percent from the first quarter of 2025.

Gold ETFs saw strong inflows in January and February, but demand was “lost” in March as withdrawals from US funds reversed those gains on profit-taking and de-leveraging, the WGC report said.

“March’s deep and prolonged pullback was reflected in a broader risk-off move, which further fueled gold sales to meet liquidity needs,” the report’s authors say.

On the other hand, Asian countries like China, India and Japan saw strong ETF-buying activity throughout the quarter. Overall, the sector added 84 metric tons of gold to ETF holdings for the quarter, just shy of the previous quarter’s record of 91 metric tons.

“On the ETF front, this is actually where it has been very interesting to gauge the sentiment of Western investors versus Eastern investors,” Cavattoni said.

“I think in the Western markets the momentum trading and a little more tactical trading is showing itself in ETF flows. Whereas in the Asian markets, you have a little bit less demand for jewelery but you definitely have a hold on investment demand, especially in financial instruments.”

Demand for a flexible central bank despite very high prices

In the first quarter of this year, the central bank’s gold purchases reached 243.7 metric tons of gold, up 17 percent from the previous quarter and 3 percent year-on-year.

Central bank buying has been a key pillar of gold’s bull market case. In recent years, the yellow metal has begun to take a more prominent place in the asset portfolios of many of the world’s central banks.

Diversification into gold is seen as a reliable risk management tool for monetary policymakers as they seek to reduce their country’s dependence on the US dollar.

The National Bank of Poland made the largest increase in gold reserves for the period by 31 metric tons, putting it closer to its target of 582 metric tons and 700 metric tons. Central banks of Uzbekistan (25 MT), Kazakhstan (12 MT) and China (7 MT) were also significant buyers of gold for 1Q2026.

However, sales also saw growth during the quarter, particularly from Turkey, (70 MT), the State Oil Fund of Azerbaijan (22 MT) and the Central Bank of Russia (22 MT).

This should come as no surprise, Cavattoni said, as the yellow metal has traditionally been used as a means of weathering economic storms. “Central banks are using it as the liquid instrument that they need. And, you know, we talked about what’s going on with the price, a lot of people have made significant profits on gold,” he said, adding that like any gold investor, central banks took advantage of those profits to get cash.

“But I think right now, the interesting thing is that we’re actually still in net purchasing territory for central banks.”

2026 gold market outlook

For the remainder of 2026, the WGC thinks safe-haven gold demand will continue to benefit from a “geopolitical risk premium,” particularly in Asia.

Demand for bars and coins is expected to continue as the dominant market segment, as gold ETFs have recorded lower inflows than last year. Jewelery demand is likely to decline further due to high prices and strict regional tax policies. However, the central bank buying spree shows no signs of stopping in 2026.

Cavattoni believes the next move in the gold bull market is on the horizon. “We just have to wait for the next catalyst,” he said. “I think the biggest thing to keep a close eye on is the economic situation that develops over the next, six to 12 months. Really, something that develops as a result of the outcome of this war.”

At the moment, Cavattoni and the WGC are constantly monitoring volatility and any signals coming from the world’s central banks about how they plan to respond to that volatility and inflation risks.