(Kitco News) – Global gold demand fell short of the first quarter’s performance in Q2, but still beat Q2 2024 by 10%, while miners’ silver production rebounded after a weaker Q1, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that tariff uncertainty hit the gold market in a big way last week.
“It was reported at the end of last week that, according to the U.S. Customs and Border Protection service, some gold bars (1 kg and 100 oz) imported into the US would fall under a customs code that would be subject to tariffs,” they wrote. “The reciprocal tariffs came into effect from one minute past midnight on 8 August. The gold futures price in the US spiked to a new high on Friday and the nearest futures contract jumped to a ~$30/ oz premium to the spot price. However, the White House has said it will clarify the import tariffs on gold bars, the implication being that they won’t be subject to a tariff, and the futures prices eased back.”
“The threat of tariffs led to a dramatic increase in bullion flows into the US starting in December and continuing through the first quarter of this year as COMEX vault stocks more than doubled to 45 moz in early April before stalling once the list of exemptions was made public,” the analysts said. “They slid to under 37 moz in July but then started to rebuild, reaching 38.7 moz.”
Global gold demand totaled 1,079 tonnes in the second quarter of 2025 – a 10% increase over Q2 2024 but lower than Q1 2025. “Jewellery demand fell by 14% year-on-year in the first quarter to 357 t, contracting in all major regions. As previously noted, the high price has hit consumer demand. Investment demand was 477 t, supported by solid bar and coin demand and a fourth consecutive quarter of inflows into ETFs. Bar and coin demand was stronger in most regions except North America. However, ETF holdings in North America rose the most of any region, 73 t out of a total gain of 171 t, no doubt aided by the many tariff announcements and the economic uncertainty associated with them. Asian funds saw almost as large inflows (70 t), showing concern on the receiving end of the tariffs too. Meanwhile, primary supply continued to edge higher to 1,249 t in Q2’25, up 3% year-on-year, and H1’25 was 1% higher year-on-year.
Heraeus also noted President Trump’s continued interference in U.S. institutions after the Federal Reserve left interest rates unchanged at its July meeting. “This was the fifth consecutive meeting with no change, but unusually this time two governors dissented,” the analysts said. “President Trump was unimpressed and made it clear that he wanted lower rates. This is not the first time that a US president has put pressure on the Fed chairman, as Trump vs. Powell has echoes of Nixon vs. Burns. Burns ultimately relented and lowered rates and inflation got further out of control. Meanwhile, Nixon also broke the dollar link to gold in 1971.”
The weak payrolls report that followed the Fed decision – including major downward revisions to the previous months’ data – showed a deteriorating labor market. “Trump fired the head of the Bureau of Labor Statistics which compiles the jobs data, stating the figures were manipulated to make him ‘look bad’,” they wrote. “The market also shifted its view of the number of interest rate cuts by the end of the year from one or two to two or three and raised the odds of a 25 bp cut at the next meeting to 95%. Mostly, the Fed has cut rates to try to support employment irrespective of where the inflation level is, making that look like a fair assessment.”
“If gold is insurance against government or central bank policy mistakes, then there may well be potential for more upside,” they noted. “However, for the time being, the gold price is continuing in its holding pattern.”
Spot gold is sliding to start the week with prices hitting a low of $3,341.46 just after 10:30 am EDT, and last trading at $3,348.03 per ounce for a loss of 1.46% on the session.
Turning to silver, Heraeus noted that primary silver miners are reporting increased production during Q2 after a weaker first quarter.
“Pan American silver produced 5.1 moz of silver in the second quarter on higher grades and throughput at La Colorada, a modest improvement on 5.0 moz in the first quarter,” the analysts wrote. “At 10.1 moz, the first half output is in line with the lower end of guidance for the year, which has been set at 20-21 moz. Hecla lifted second-quarter output to 4.5 moz from 4.1 moz in the first quarter, putting the company on track to reach the upper end of guidance (15.5-17.0 moz) this year. Coeur’s silver output of 4.7 moz in Q2’25 was boosted by the Rochester mine operating at capacity, after starting commercial production at the end of Q1’24 and ramping up during Q2’24, and the acquisition of the Las Chispas mine which produced 1.5 moz during the quarter. Having produced just under 8.5 moz in the first half of the year, the company should be able to hit its 16.7-20.25 moz guidance.”
Silver prices rallied back above $38 per ounce last week, but the gray metal is falling alongside the gold price on Monday morning. At the time of writing, spot silver last traded at $37.733 per ounce and is down 1.53% on the daily chart.
