ROSS NORMAN – Retail Gold Price Fatigue ?
A longer piece than usual … come with me … outside chance you might find this interesting.
After a 38% year to date increase in the gold price, let's address the question whether price fatigue is setting in for retail gold investors (… yes, the question that no one asked).
In ordinary times one might expect high gold prices to be met with decreased demand (especially for jewellery in price sensitive parts of the world like Asia), an increase in scrap supply, some forward selling by producers and profit-taking by investors, with speculators leading the charge. In other words, the gold price reverts to the mean and adjusts lower. Ordinarily gold has a self-righting mechanism like a boat with a heavy keel.
But we don't live in ordinary times …
It has happened before, but for different reasons. In 2000 we had a series of deeply bullish events that inverted things and prompted buying on price strength, given the powerful or overwhelming expectation that prices would keep rising. So gold buying begat more buying in a self-fuelling cycle. A bubble … ? No, a new paradigm. And to flip the poles you need quite a powerful catalyst. So gold rose 685% between 2000 and 2011. That compares to about 100% in the 2 years of the current run. I shalln't do the maths on what that implies as a peak price to save possible embarassment … actually I lied … it would suggest a peak price of $11,250 in 2032. Moving on.
So what are we saying here ? Well gold goes through lengthy multi-year periods of significant gains before it slips into, well … hibernation … sorry. (Can you remember the late 90's or 2013/2019 ?)
So, what can we read from gold's “digital exhaust” ? Markets already feel quite heady and gains excessive, so are we about to lose momentum and are we reaching bull market fatigue ? What do the online contrails tell us about the gold price outlook ? This is not a conventional way of assessing the market ( …fundametals … not my style - I prefer an alternative perspective) and for a complete picture one should of course take into account empirical market data. Please do read our disclaimer. Such fun.
__________________________________________________________________________________________________________
> Google Trends
In the chart below we show worldwide searches for “buy gold” (yellow line/LHS) ; over the last two years searches have edged higher as prices have also risen (blue line/RHS) before a significant jump as gold hit another all time high.
The chart suggests a shifting dynamic ; from early 2023–2024 searches and gold prices moved together, but by 2025, searches began spiking only after big price jumps, creating a lagging or “chasing behaviour.” By late 2025, retail interest (captured by Google searches) rose when gold was already expensive, potentially signalling FOMO-driven searches rather than leading indicators of price. As such, early search trends helped reflect rising demand. Later, they became a contrarian signal—when searches peaked, prices were near a local high. This is consistent with crowd psychology, where retail attention lags institutional moves. This suggests retail investors searched more when gold was already near record highs (FOMO effect). This shift makes Google Trends less useful as a predictive tool and more useful as a contrarian signal for sentiment timing.
It is clear that gold benefits from the 'oxygen' of publicity and simply being written about. Bullish headlines, but more importantly - many of them - seem to put “buying gold” in mind. This is corroborated with a number of retail dealers who have seen good physical offtake from wealthy clients latterly. What have we learned ? Gold needs ongoing effective marketing … it benefits from exposure.
Google Trends for "buy gold" is an indirect measure of demand, reflecting search interest rather than actual purchases. It is a interesting proxy for demand. Or maybe underlying sentiment. According to the Metals Focus “Gold Focus 2025” physical investment demand “held up well” in 2024 but it was a tale of two continents with the West (US and Europe down 33% and 49% respectively) while the East (Asia and Middle East) made up the difference … and a little more.
The data suggests that gold demand (as proxied by "buy gold" searches) is price elastic in the later period (especially August–September 2025), where rising prices are associated with a significant drop in demand. Earlier in the period (2023–mid-2024), demand appears more inelastic, as search interest remains stable despite rising prices. The shift to elastic demand in 2025 likely reflects high price levels deterring investors or a peak in speculative interest followed by a decline.
__________________________________________________________________________________________________________
> Buying or Selling ?
Comparing searches (below) for “buy gold” (blue/LHS) to searches for “sell gold” (red/LHS) - we see buying interest typically outweighs selling by between 2 to 3 fold (yellow line/RHS). That is until the very recent gold price rally when buying and selling matched. This likely suggests retail buyers are sceptical of the record gold price and took the opportunity to take profit. Hence momentum fade. Think EU and US mainly.
_________________________________________________________________________________________________________
> Chinese & Indian Gold Sentiment
It is abundantly clear that the Eastern and Western hemispheres see things differently.
The chart below shows the gold price (in gold/RHS) to which we have added the correlation between local and the international gold price, in order to derive sentiment … with domestic Chinese gold price correlations shown in red /LHS and ditto for Indian figures in green/LHS. Two very different stories for the two leading gold-buying nations.
China: Premiums vs London Gold
-
In late 2023, Chinese premiums were very strong (+$50–120/oz) when London gold traded below $1950.
-
As gold prices rose through 2024 above $3000/oz, premiums steadily collapsed and turned negative, meaning Chinese buyers were unwilling (or unable due to quotas/import restrictions) to pay more than the global price.
-
The correlation shifted from –0.5 in 2023 to as low as –0.8 to –0.9 by 2025, showing that when global gold rises, Chinese local premiums now reliably fall.
-
This makes China a contrarian demand signal: rallies in global paper/financial gold correspond with weakening local physical appetite.
India: Premiums vs London Gold
-
Indian premiums were highly erratic, swinging from sometimes strongly positive (e.g., +50 over spot in Oct 2023, May 2025) and often sharply negative (–90 in Jul 2024, –74 in Mar 2025). By mid–2025, Indian premiums also showed sporadic sharp inversions (e.g., –91 in Jul 2024, –74 in Mar 2025) but lined up less consistently with price moves.
-
Local premiums reflected import duties, rupee volatility, and festival/wedding season demand more than global price levels.
-
Correlation with London gold was weak and unstable and around –0.2 through 2023–2024.
-
Briefly moved toward near –1.0 in mid-2025, showing sharp inverse linkage at extremes.
-
But scattered episodes of short-term positive correlation also appeared (e.g. Sep 2025, +0.38).
-
This shows India’s premium is more policy and seasonality-driven than purely price-driven. Premiums in India react more to local taxes/duties and seasonal consumption than to international prices directly, making correlation with London gold unstable. As a global barometer … not useful. By mid-to-late 2025, both China and India consistently showed negative or suppressed premiums, signalling physical demand destruction when paper gold prices spiked too far, too fast.
Interpretation of Trends
-
Mid-2024 to Early 2025:
-
The London Gold Price continues to rise, but the Chinese Gold Premium correlation begins to weaken and eventually turns negative, implying that as global prices increased, Chinese premiums started to diverge, possibly due to local market dynamics or policy changes.
-
The Indian Gold Price correlation starts to rise, suggesting a growing alignment with the London price. More likely this is simply correlation, but not causation with other factors at play such as the armed conflict with Pakistan, the greatest open conflict between the nations in decades.
-
Mid-2025 to Sep 2025:
-
The London Gold Price surges to its peak, but both the Chinese and Indian correlations turn strongly negative (below -0.8). This indicates that as the global gold price reached higher levels, both the Chinese Gold Premium and Indian Gold Price began to move in the opposite direction, potentially due to reduced local demand, economic factors, or currency effects (e.g., depreciation of the Indian Rupee or Chinese Yuan against the USD).
The chart highlights a "correlation breakdown" in major Asian gold markets as global prices surged. Early in the period (2023–mid-2024), positive correlations suggest strong local demand supporting the price rally, with premiums in China reaching record highs due to supply disruptions and investor interest
However, by 2025, the shift to negative correlations points to demand fatigue: extremely high prices (e.g., over $3,000/oz) may have deterred retail buyers in both China and India, leading to premiums turning into discounts and local prices not rising proportionally. This could signal market saturation, economic pressures (e.g., weak consumer confidence), or competition from other assets like equities.
__________________________________________________________________________________________________________
The bifurcation in gold demand sentiment between East and West is one thing … and it is clear that retail physical demand is somewhat vulnerable too as we have seen … but this is only part of the story. We have not covered it here but the key/core drivers for gold remain unreported central bank demand, coupled with strong speculative and leveraged OTC buying from China. Perhaps you saw that one Chinese trader alone had made like a bandit with profits of over $1.5 billion last year. Yes, the story is elsewhere.
In short, the West has missed out … institutional demand (ETFs) is late to the party, silver remains reluctant like a Gen Z asked to dress smartly and attend a grown-ups drinks party … meanwhile the real party remains … elsewhere. Congrats to those that saw this coming. The lifeboat has left. You are either in .. or you are history.
Ross Norman
CEO – Metals Daily Ltd, London
www.MetalsDaily.com
ross@metalsdaily.com