UAE, Asia drive gold investment boom as global demand hits record $193 billion

Global gold demand value surged 74 per cent year on year to a record $193 billion (Dh708 billion) in the first quarter of 2026, driven by higher prices and strong investment demand, according to a World Gold Council report.

Total gold demand rose 2 per cent to 1,231 tonnes during the quarter. The increase in value was largely due to a sharp price increase. Gold averaged $4,873 (Dh17,899) per ounce and reached a record high of $5,405 (Dh19,853) in January before easing.

Investment demand was the main driver of growth, the report showed. Bar and coin demand jumped 42 per cent to 474 tonnes, marking one of the strongest quarters on record. Demand was led by Asian markets, but the trend also reflects investor behaviour in the UAE and wider Middle East, where physical gold remains a popular safe haven.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

Retail investors in the UAE continue to favour gold bars and coins as a hedge against inflation and currency fluctuations. Strong demand is typically seen in Dubai and Abu Dhabi, where gold trading remains a key part of the retail and investment landscape.

Gold-backed exchange-traded funds recorded inflows of 62 tonnes in the first quarter. This was lower than the same period last year, when inflows were significantly stronger. Analysts point to outflows from US funds and expectations of higher interest rates as factors limiting ETF demand.

Jewellery consumption decline

Jewellery demand remained under pressure as prices stayed elevated. Global jewellery consumption fell 23 per cent year on year to around 300 tonnes, one of the lowest levels in recent years. Despite this, jewellery demand rose 31 per cent to $47 billion (Dh172 billion), reflecting higher prices rather than higher volumes.

In the UAE and across the region, consumers are adjusting to higher prices by buying lighter pieces or delaying purchases. Spending remains resilient, especially during weddings and festive periods, but overall volumes have declined.

Central banks continued to support the market. Net purchases totalled 244 tonnes in the first quarter, up 3 per cent year on year. Gold remains an important reserve asset for many countries seeking to diversify away from traditional currencies.

Demand for gold in technology increased slightly by 1 per cent to 82 tonnes. Growth was supported by continued expansion in electronics and artificial intelligence infrastructure.

Gold supply rose 2 per cent year on year to 1,231 tonnes in the first quarter, which was mainly supported by modest growth in mine production and higher recycling.

Geopolitical uncertainty driving demand

Looking ahead, geopolitical uncertainty is expected to remain a key driver of gold demand. Tensions linked to the US-Israel-Iran war and broader global risks are likely to support investment demand in 2026.

The World Gold Council said demand for bars and coins is expected to remain strong, particularly in Asia and the Middle East. High prices may continue to weigh on jewellery demand, although spending is likely to stay steady.

“Gold’s volatility has markedly increased in 2026, with prices peaking above $5,400/oz in January before a significant but contained correction. The combination of price momentum and heightened geopolitical risk propelled investment demand, most notably in Asia, as investors sought security in physical gold. Alongside this, continued central bank buying offset tactical selling," Louise Street, a Senior Markets Analyst at the World Gold Council, said.