Insights 
VT 
Gold demand reached record highs in the third quarter, partly driven by high ETF inflows of 222 tons and more than 300 tons in bar and coin purchases. Despite a temporary USD 500 price drop from its peak in October, gold’s status as a safe haven remains intact. The World Gold Council reports robust demand due to favourable investment conditions.
Central banks and institutions bought 220 tons of gold in the third quarter, marking increases of 28% from the previous quarter and 10% from the previous year. An estimated two-thirds of these purchases were unreported. For the year 2023, central bank acquisitions are anticipated to range between 750 and 900 tons, marking a reduction from recent years but still surpassing pre-2022 figures.
Jewellery Demand Decline
Elevated gold prices continue to suppress jewellery demand, which remains lower than the previous year for the sixth consecutive quarter. China shows modest resilience, while India’s jewellery demand plummeted by 31% from the previous year, hitting 118 tons—the lowest for a third quarter since 2020.
The sharp price drop from the record high on October 20th, 2025, has introduced significant short-term volatility into the market. While this merely erased the month’s earlier gains, it signals that the path higher is not a straight line. We see this as a healthy consolidation before the next major move, creating opportunities for those positioned to trade the swings.
Investor interest is providing a solid floor under the price, with third-quarter Exchange Traded Fund (ETF) inflows reaching a record 222 tons. Data from the past month shows that the SPDR Gold Shares (GLD) experienced its largest weekly net inflow since the banking sector instability we saw back in the spring of 2024. This indicates that long-term investors are using any price weakness as a buying opportunity.
Central Bank Purchases
We must also consider the steady and price-insensitive buying from central banks, which added 220 tons in the third quarter. The fact that a large portion of these purchases remain unreported suggests a strategic shift towards gold, likely driven by geopolitical de-risking. This level of institutional demand limits the potential for a deeper price collapse.
The primary headwind remains monetary policy, as comments following the last Federal Reserve meeting have cast doubt on a widely expected December interest rate cut. With the latest core inflation data for September coming in slightly above expectations at 3.8%, the market is now pricing in a higher chance that rates will stay elevated. This uncertainty is likely to cap any immediate, explosive rally in gold prices.
This dynamic between strong underlying demand and Fed-induced uncertainty means implied volatility in gold options should remain elevated. Traders could consider strategies that benefit from a significant price move in either direction, such as long strangles, particularly around key economic data releases in November. For those with a bullish bias, using bull call spreads on December or January contracts offers a way to capture potential upside while clearly defining downside risk.
