The appetite for gold among the world's central banks shows no signs of slowing down, even as the gold industry comes off a record year of demand for the precious metal, according to the World Gold Council.

“Geopolitical and economic uncertainty remains high in 2025, and it seems as likely as ever that central banks will once again turn to gold as a stable strategic asset,” the industry association said in its report on Wednesday.

The outlook comes after the council highlighted a record high in annual demand last year, as central banks “continued to hoard gold at a dizzying pace.” Gold jewelry was an outlier, with demand declining due to rising prices.

“We expect central banks to continue to lead the way and gold ETF investors to join the fray,” the report said. ”Jewelry demand will remain under pressure and we may see further growth in recycling. Mining supply is expected to remain strong.”

Central banks bought 1,045 metric tons of gold last year, worth about $96 billion at Tuesday's prices, with Poland, India, and Turkey being the biggest buyers, according to the group. Central banks have been net buyers for 15 years, but the pace of annual purchases has roughly doubled since the outbreak of war in Ukraine, as authorities sought to rebalance reserves away from US dollar assets.

“I think the biggest surprise on the demand side is the fact that central banks bought 1,000 tons last year,” said John Reade, senior market strategist at the trade body. ”There has been widespread buying by central banks, and more than we estimated at the beginning of the year.”

Gold prices rose 27% over the year as investors sought refuge from conflicts in Ukraine and the Middle East, and central banks turned to cutting interest rates. Total demand for gold rose 1% to a record annual high of 4,974 tons last year, according to the report.

The rise in prices took a toll on jewelry consumption, which fell 11% to 1,877 tons. China was responsible for much of the decline, as jewelry demand fell to second place behind India for the second time in three years.

“China remains the largest gold market; obviously, jewelry demand fell sharply, but investment demand rose,” Reade said in an interview. ‘The relationship between the two could almost be used as a crude measure of economic sentiment within China.’

Investor sentiment could improve if the People's Bank of China continues to announce gold purchases, according to the report. Central banks' motivations for buying are typically more strategic than those of other investors, and sales have been relatively scarce over the past 15 years. As a result, these institutions tend to be less reactive to price movements, which provides an important pillar of support for gold bullion prices.

Bloomberg