The demand for physical gold investment is forecast to exceed jewelry demand to become the biggest driver of the global gold market this year, marking the first time this trend has appeared since the precious metal consulting company (Metals Focus) began statistics.
In its annual report released on Thursday, Metals Focus said that gold prices maintaining highs have significantly weakened jewelry purchasing power, while demand for gold bar and gold coin hoarding continues to increase sharply.
According to this organization, gold entered 2026 with great momentum after recording the strongest increase in 44 years last year. The prolonged upward momentum created a "self-consolidation" effect, attracting more investment capital into precious metals.
Gold prices once set a historic record of 5,595 USD/ounce in January when a wave of individual investors flocked to seek opportunities in the market.
However, the decrease of about 20% since the peak has disappointed many small investors. In addition, the sharp increase in oil prices due to the conflict related to Iran has also narrowed available income in many important gold bar and gold coin markets.
However, Metals Focus still maintains an optimistic view on the long-term prospects of the precious metal.
This organization forecasts that gold will regain its upward momentum in the second half of 2026 and the average gold price for the whole year may increase by 43%, to a new record level of 4,920 USD/ounce.
This scenario is based on the assumption that economic and political losses from a prolonged conflict will prompt the parties to find a peaceful solution soon, thereby improving psychology in the financial market.
According to Metals Focus, total global gold demand in 2026 is expected to decrease by 2% due to weakening jewelry demand and gold buying activities of central banks. However, this decrease will be partly offset by a strong increase in physical gold investment demand.
This organization also forecasts that the net gold purchase volume of the central banking sector will decrease this year, although the trend of diversifying foreign exchange reserves has not changed.
The reason is that high energy prices have forced many central banks to step up intervention in the foreign exchange market to limit the depreciation of the domestic currency.
This process usually requires central banks to sell off high-liquidity reserves, including gold. We also forecast that gold sales from Russia will increase this year, contributing to increasing total gold sales in the official sector," the report stated.
Last year, demand for gold jewelry fell by 19% amid strong gold prices, while geopolitical and economic instability globally led people to prioritize hoarding defense assets.
Instead of buying jewelry, many consumers have switched to buying gold bars and gold coins in 2025 to preserve asset value.
Metals Focus believes that this trend will continue to be maintained this year.
The demand for physical gold investment is forecast to increase by 15%, reaching the highest level since 2013 and exceeding jewelry demand for the first time in the organization's statistical history.
China is expected to lead the increase in global gold investment demand as people in this country continue to turn to precious metals as a asset preservation channel in the context of economic instability and volatile financial markets.
