Gold remains a cornerstone of global portfolios due to its scale, liquidity, and reserve holdings.
In Dubai, the global gold market is estimated at approximately $31 trillion, based on nearly 220,000 tonnes of above-ground stock accumulated over centuries, making it one of the largest and most enduring asset classes in the financial system.
Despite its massive size, gold still represents a relatively small portion of global portfolios. According to the World Gold Council’s Gold Market Primer: Market Size and Structure report, investor-held bullion makes up only about 3% of the estimated $320 trillion in worldwide financial assets, underscoring a gap between the market’s scale and its allocation.
This mix of substantial market size and limited allocation continues to define gold’s role across investment portfolios, central bank reserves, and consumer markets.
Depth Across Investors and Institutions
The investable gold market, primarily in bullion, is valued at over $15 trillion. This includes roughly $9 trillion in physical bars, coins, ETFs, and over-the-counter holdings, around $5 trillion held by central banks, and nearly $1.5 trillion in derivatives.
Gold’s ownership spans individuals, institutions, and governments, providing a broad and diversified base that helps maintain stability even during periods of market stress.
Central banks remain major participants, collectively holding nearly 39,000 tonnes of gold—valued at around $5 trillion—representing roughly 26% of global allocated reserves. Developed markets generally maintain a larger share of gold in reserves, averaging about 30%, while emerging markets are gradually increasing their allocations, though they remain below that level.
Liquidity Rivals Major Asset Classes
Liquidity is a key feature of gold. In 2025, average daily trading volumes reached approximately $361 billion, with transactions occurring across both over-the-counter markets and exchanges.
London remains the hub of the over-the-counter (OTC) gold market, handling over $160 billion in daily trading, while futures activity is dominated by COMEX, with growing participation from Asian markets.
Gold’s ability to be traded at scale across multiple venues enables investors to enter and exit positions without materially impacting prices, placing it on par with major government bond markets in terms of liquidity.
Market Shaped by Stock, Not Just Supply
Unlike most commodities, gold’s market is influenced as much by its existing stock as by new production. Almost all gold ever mined still exists in some form, whether as jewelry, bars, coins, or central bank reserves.
Gradual Supply Growth Reinforces Scarcity
Annual gold supply grows slowly, increasing by about 1.8% each year. This gradual growth reinforces scarcity while allowing the market to adjust to changing demand through recycling and reallocation of existing holdings.
Jewellery represents the largest share of above-ground gold at 44%, followed by bars and coins at 21%, and central bank holdings at 18%. Smaller portions are held in ETFs, industrial applications, and other uses.
Dual Demand Supports Stability
Gold’s market structure reflects a balance between consumer and investment demand. Jewellery and technology account for a significant portion of consumption, while investment flows and central bank purchases respond more directly to economic and financial conditions.
This dual role helps stabilize the market: consumer demand tends to support prices during periods of economic growth, while investment demand typically rises during times of uncertainty, providing a counterbalance.
Under-Allocation Remains a Key Theme
A striking feature of the gold market is how little it features in global portfolios despite its size and liquidity. Many investors maintain only limited exposure, and some hold none at all.
Research indicates that a strategic allocation of 2% to 10% can enhance risk-adjusted returns, though actual allocations vary significantly across regions and investor types.
A Core Reserve Asset
Gold continues to serve as a central component of global reserves, prized for its liquidity, diversification, and resilience during crises.
In recent years, central bank demand has grown, with many institutions increasing their holdings to reduce dependence on major currencies and strengthen long-term financial stability.
Survey data shows that reserve managers anticipate gold’s share of global reserves will continue to rise, alongside a gradual shift toward diversifying away from the US dollar.
Gold’s dual role as both a consumer good and a financial asset enables it to adapt across economic cycles, maintaining its relevance for investors, policymakers, and consumers alike.
