(Yicai) Nov. 4 -- Central banks’ gold purchases and inflows into gold exchange-traded funds were the main drivers of gold demand in the third quarter, according to the latest report by the World Gold Council.

Central banks increased their gold reserves by 42 percent to 321 tons in the three months ended Sept. 30 from a year earlier, the highest since the fourth quarter of 2024, mainly for reserve diversification and risk management. In the first three quarters, their gold reserves expanded 6 percent to 675 tons from the same period last year.

Global physical gold ETFs reversed net outflows in the second quarter into a net inflow of 211 tons in the third quarter, down 6 percent from the strong net inflow a year ago, when the total gold ETF holdings reached a record high of 4,256 tons.

Despite the above, global gold demand fell 1 percent to 1,369 tons in the third quarter from the same period last year, dragged down by individual investors, who mostly adopted a wait-and-see attitude, according to the WGC. The average gold price was USD4,262 per ounce, and the total demand for gold calculated by value jumped 22 percent to USD188 billion.

Global demand for gold bars and coins plunged 19 percent to 268 tons in the third quarter from a year earlier. The Chinese market was an exception, with bar and coin demand up 7 percent.

High gold prices suppressed jewelry demand, with global demand for gold jewelry down 17 percent to 313 tons in the period, as consumers turned to lightweight and low-purity gold jewelry. However, gold jewelry demand by value edged up to USD43 billion.

Demand for gold used in industrial technology inched up 3 percent to 85 tons in the July-September period from a year ago, the highest since the fourth quarter of 2021. Driven by the artificial intelligence-related manufacturing industry, demand for gold used in electronics climbed 5 percent to 72 tons.

In the third quarter, the total global gold supply dropped 1 percent to 1,369 tons from a year earlier. The gold mine output rose 3 percent to 1,071 tons. Despite high gold prices, recycled gold supply fell 8 percent to 314 tons, the lowest since the fourth quarter of 2023.

Looking ahead, the bullish factors in the gold market will likely remain roughly balanced through year-end, said Louise Street, senior market analyst at the WGC. Although rising interest rates and divergent inflation expectations may pose pressure on gold prices, geopolitical risks and financial market pressures may prompt market participants to turn to gold in search of stability, she added.

Editor: Futura Costaglione