WGC: Gold Demand Faces East/West Divide in Q1 2026

Second highest quarter for bar and coin demand

Safe-haven demand for gold in the face of escalating geopolitical tensions and economic stress had investors scooping up gold bars and coins in Q1, contributing to the metal's surging price.

At 474 metric tons of gold bar and coin purchases, Q1 2026 represents the second highest quarter for demand that this segment of the market has experienced. All in, the WGC outlines that gold bar and coin demand in Q1 was up 11 percent over Q4 2025, and 42 percent over the first quarter of 2025.

Asian markets led the way, most notably China and India, which are historically regional hot spots for gold investment demand. Notably, Chinese bar and coin purchases had the strongest quarter on record at a whopping 207 metric tons, surpassing the previous record of 155 metric tons, set in the second quarter of 2013.

The WGC attributes some of this to the Chinese government’s VAT reform policy on gold jewelry. It came into effect at the end of 2025, making jewelry more expensive and pushing investors toward bars and coins.

India also experienced heavy demand for gold bars and coins, with demand from this segment soaring by 34 percent year-on-year to come in at 62 metric tons. This marked the highest first quarter since 2013, and put the segment almost on par with jewelry, which has typically been multitudes higher than bar and coin demand.

“I think that overall there was a lot of interest in the part of the Indian market, and the Chinese market,” Cavatoni explained to INN. “My sentiment in terms of bar and coin demand is that it's actually continuing to be a substantial market around the world, particularly in the emerging markets.”

Looking over at the US, at 18.1 metric tons this regional market experienced a year-on-year jump of 14 percent in gold bar and coin demand. However, that's down 20 percent from what investors picked up in the previous quarter.

That’s probably due to a much higher gold price slowing purchases in February and early March before the metal corrected lower. The WGC shared that affordability has been a top priority for US gold investors, as represented in the popularity of low-weight physical gold investment products.

Gold ETF demand — pronounced east vs. west divide

Total investment demand for gold in Q1 came in at 535.6 metric tons, down 11 percent over Q4 2025 and 5 percent from the first quarter of the previous year. A loss of investor appetite for gold exchange-traded funds (ETFs) was a primary driver, with a distinct trend emerging between markets in Asia and the US.

During the quarter, gold ETF demand totaled 62 metric tons, marking a seventh consecutive quarter of increased holdings. However, that figure is a steep drop of 65 percent from the previous quarter and 73 percent from Q1 2025.

The WGC report notes that while January and February saw strong inflows into gold ETFs, demand “lost steam” in March as outflows from US funds reversed those gains on profit taking and de-leveraging.

“The deeper and more prolonged March pullback was reflected in a broader risk-off move, which likely further fuelled the sale of gold to fund liquidity needs,” the report’s authors state. On the flip side, the Asian nations of China, India and Japan saw strong ETF buying activity throughout the quarter. In total, this region added 84 metric tons of gold to ETF holdings for the quarter, down just slightly from the record 91 metric tons reported for the previous quarter.

“On the ETF front, this is actually where it's been very interesting to gauge the sentiment of western investors vs. eastern investors,” said Cavatoni. “I think the momentum trading and a bit more of the tactical trading in the western markets is showing itself in the ETF flows. Whereas in the Asian markets, you have a little bit less of the jewelry demand, but you have definite uptake on the investment demand, in particular amongst the financial instruments.”

Central bank demand resilient despite much higher prices

In the first quarter of this year, central bank gold purchases grew by 17 percent over the previous quarter and increased 3 percent year-on-year to reach 243.7 metric tons of gold.

Central bank buying has become a major pillar of the bull market case for gold.

In recent years, the yellow metal has begun to take a more prominent position 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 national reliance on the US dollar.

The National Bank of Poland had the largest gold reserve increase for the period at 31 metric tons, putting it at 582 metric tons and closer to its target of 700 metric tons. The central banks of Uzbekistan (25 metric tons), Kazakhstan (12 metric tons) and China (7 metric tons) were also significant purchasers of gold for Q1.

However, there was also an increased level of sales during the quarter, particularly from Turkey (70 metric tons), the State Oil fund of Azerbaijan (22 metric tons) and the Russian central bank (22 metric tons).

That shouldn’t be surprising, Cavatoni noted, as the yellow metal is traditionally used as a means to ride out economic storms. "Central banks are using it as this liquid instrument that they need. And, you know, we talked about what's going on with the price — lots of people have made significant gains on gold,” he said, adding that as with any gold investor, central banks took advantage of those profits to attain 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 sees safe-haven gold demand continuing to benefit from “the geopolitical risk premium,” especially in Asia. Bar and coin demand is expected to continue its reign as the dominant market segment, while gold ETFs are seen posting lower inflows than last year. Jewelry demand is likely to decline further on higher prices and stricter regional tax policies. However, the central bank buying spree shows no signs of stopping in 2026.

Cavatoni believes the next leg up in the gold bull market is on the horizon.

“We just have to wait for that next catalyst,” he commented.

“I think the biggest thing to keep a close watch on is the economic condition that develops over the next, let's call it six to 12 months. Really, something that develops as a consequence of the outcome of this war.”

For now, Cavatoni and the WGC are watching for volatility and any signals coming out of the world’s central banks as to how they plan to respond to that volatility and the risk of inflation.