Gold Digger: Gold demand keeps hitting new records, says World Gold Council

• Gold demand hits record high in September quarter despite soaring prices
• Investment interest delivers biggest boost, with gold investing now becoming ‘mainstream, says WGC
• Metals Focus still optimistic on silver into 2026 after dip

Record gold prices are doing little to quell demand for the precious metal as demand by both volume and value goes through the roof.

The latest statistics from the World Gold Council show that global demand hit 1313t including 55t of over the counter demand in the September quarter, up 3% even as prices hit 12 new all time highs, lifting on average 5% QoQ and 40% YoY to US$3456.54/oz.

Those levels have been left in the dust as global panic over new escalations between the US and China thrust gold as high as US$4300/oz in October, since retreating to an even US$4000/oz.

ETF and bar and coin demand led overall gold demand up a whopping 44% on a value basis to US$146bn, with Aussie bar and coin demand alone lifting 30% as retail investors queued around the block at gold shops like ABC Refinery’s Martin Place shopfront in Sydney.

At 222t globally, Gold ETFs added even more bullion than central banks (220t), while investment demand overall lifted 47% YoY to 537t.

Shaokai Fan, the World Gold Council’s head of Asia (ex-China) and global head of central banks said the investment narrative was changing to benefit gold, regardless of already high prices.

“No buyer is price insensitive,” he said. “They’re always going to look at the price to some extent.”

However …

“Central banks for instance, they probably have a longer term view on gold and their senior leadership has set a target for how much gold they want to buy.

“If they’ve made that decision then it’s just incumbent on the reserve management team to execute that decision.

“So they’re going to try to find opportunities to buy, but they still need to get to that goal by some time or some other goal that the senior management has set.“

And investors?

Fan says the investment narrative has changed to make gold a “fundamental part” of an investment portfolio.

Most notably, influential asset manager Morgan Stanley blew up conventional wisdom by replacing its recommendation of a 60-40 portfolio with a 60-20-20 – majority equity with an equal share of gold and fixed income investment.

“For institutional and retail investors, I think a lot of them are more convinced than before on the case for gold,” he said.

“That (Morgan Stanley recommendation) kind of shows that the narrative on gold is that it’s indispensable, it’s much more core and therefore it’s become much more mainstream across all types of investors.

“So I think that’s been part of why investors have been moving in, even with these really high price levels.”

Two key news items for gold this week shifted the macro dial.

First was the – expected – 25bps rate cut from the US Fed, couched by language from chairman Jerome Powell that a follow-up cut in December may not be a sure thing.

Then came the meeting between US President Donald Trump and China’s Xi Jinping, which appeared to set-up a cooling of trade tensions between the nations.

“So we did see gold and equities actually falter a little bit on that day (the US Fed meeting) but it’s since recovered from that fall,” Fan said.

“We don’t forecast the gold price, of course, but I think that the expectation – at least the mainstream expectation – is that there’s still more room for rate cuts.

“So I think that’s partly baked into the gold price now, but of course if those rate cuts don’t materialise, then you might see a little bit of shine come off of gold.”

Supply is basically in line with demand, up 3% YoY, with recycling levels “nowhere near” the rates that may have been expected given how quickly prices have run up.

Fan said one factor was that the gold price run had not corresponded with a meltdown in other sectors of the economy, meaning holders don’t need to sell, while in India gold holders have been loathe to part permanently with their supplies, preferring to lease gold or put it up as collateral.

Can silver regain momentum?

The same factors that are behind notes of caution on future gold price increases could impact silver as well, where recent deliveries from the US to London vaults have halted a short squeeze that briefly sent prices to a record US$54/oz.

“Although the Fed delivered a widely anticipated 25bp rate cut, Chairman Powell cautioned that a further cut in December is far from guaranteed. Following his remarks, the implied probability of a December rate cut (based on Fed funds futures) dropped from nearly 100% to roughly 70%,” Metals Focus said in a note this week.

But it remains bullish.

“Looking ahead, the factors that have driven significant investment inflows into the precious metals complex are expected to remain intact well into 2026.

“Even if the Fed’s rate cuts are less aggressive than currently anticipated, the fact that cuts are still forthcoming will reduce the cost of holding precious metals and so continue to lend support to the price.

“During this period of declining interest rates, tariff-induced inflation may initially strengthen before easing, potentially leading to a more rapid decline in real interest rates.”

Metals Focus says the Trump-Xi detente looks like a fragile truce.

“Lingering tariff uncertainties, along with silver’s favourable supply and demand fundamentals, are also expected to remain supportive of prices. The final report from the US Section 232 investigation had been anticipated imminently, though its release now appears delayed due to the government shutdown,” the research group said.

“While we remain confident that silver bullion will remain exempt from tariffs, the current backdrop has perpetuated uncertainty, keeping CME inventories elevated for the time being.

“A continued deficit in the silver market, coupled with refining capacity bottlenecks for silver scrap, will also help keep physical supply relatively tight. This leaves the market vulnerable to further liquidity squeezes. As such, we maintain a bullish outlook for the silver price for the remainder of this year and well into 2026.”

Winners and losers

Here’s how ASX-listed precious metals stocks are performing:

Gold medal performers

Who were some of the top precious metals names this week?

Cazaly Resources (ASX:CAZ)

A weaker week for gold meant fewer outsized gains across the ASX precious metals landscape.

Cazaly was a rare bolter on Friday, announcing the restart of aircore drilling at its Goongarrie gold project.

It follows a 58 hole program in August that had to stop at 2748m due to inclement weather. An additional 8000m is planned after the explorer announced anomalous results this week from the initial run.

The company is looking for high grade gold to the north of Kalgoorlie at prospects on its Western Domain area.

The junior’s targets sit in close quarters with Genesis Minerals’ (ASX:GMD) Aphrodite gold project to the south and the Comet Vale and Lakeview project being explored by Gorilla Gold Mines (ASX:GG8) to the northwest.

Focus Minerals (ASX:FML)

For some time, the irony of Focus’ stock ticker was the sole source of joy for investors watching this Chinese-backed gold miner, which has little to cheer since shutting its mines down in 2013.

The Coolgardie gold operations are now back in full swing, with Focus selling 20,014oz in the September quarter at a price of $5288/oz.

That saw the company lift its cash balance from $74.2m to $113.6m as it finally enjoys the benefits of higher prices, having already paid off a fat wad of debt with the $250m sale of its Laverton deposits to Genesis.

Focus shares have surged close to 1500% this year, most of that since late August. Maybe Shandong Gold were right to play the long game back in 2012 when they paid $225m for around half of the miner.

Shandong held 63.18% of Focus’ shares as of its last notice to the ASX in 2022.