Soaring demand for gold sparks unexpected rise in retail sales
Jewellers report strong market for precious metal amid geopolitical turmoilEir NolsøeEconomics Correspondent
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24 October 2025 10:15am BST
Rising demand for gold helped drive retail sales to a three-year high last month, delivering a small boost for Rachel Reeves ahead of the Budget.
Sales across Britain’s high streets rose by 0.5pc in September according to the Office for National Statistics (ONS), more than double market expectations of 0.2pc.
It marks the best month for British retailers since July 2022, with the increase largely fueled by shoppers buying gold.
The precious metal experienced its strongest rally since the 1970s in recent months, repeatedly breaking new records.
Nervous investors typically flock to gold during times of geopolitical turmoil owing to its status as a safe-haven asset.
The recent rally has been fueled by concerns about a possible bubble in artificial intelligence (AI) stocks, tensions between the US and both China and Russia, and fears about the health of the $3tn (£2.2tn) private credit market.
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Gold prices have risen by 50pc so far this year and doubled since the end of 2023.
More broadly, the climb has in part been fuelled by central banks, with both China and Russia significantly increasing reserves in recent years. More investors have also piled into gold since Vladimir Putin invaded Ukraine and Donald Trump took the world on the brink of a global trade war.
The ONS said: “A notable contributor to this rise was online jewellers reporting a strong demand for gold.”
The gold rally cooled earlier this week with prices suffering their biggest fall in five years. This would not have fed into the latest ONS figures for September.
Consumer confidence improving
As well as strong demand for gold jewelery, the ONS said September sales were also boosted by computers and telecommunications.
Growth in sales volumes were also revised up for August from 0.5pc to 0.6pc, although they remain 1.6pc lower than pre-Covid.
The run of positive figures suggests a minor recovery could be underway.
Matt Swannell, chief economic advisor to the EY ITEM Club, said: “Consumer confidence has improved over the past year and there appears to be scope for households to mitigate some of the impact of weaker real income growth by saving less.
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“As a result, we anticipate modest growth in retail sales next year.”
Improving retail sales will be helpful for the Chancellor as she struggles to kickstart growth. Households account for the largest chunk of spending across the economy at just under two thirds of all expenditure.
However, economists warn the momentum could fade if Ms. Reeves raises taxes in next month’s Budget, when she will be tasked with filling a hole in the public finances of around £30bn. The Chancellor is said to be considering breaking her manifesto pledge by raising income tax, something that would directly hit the spending power of households.
Alex Kerr from Capital Economics said: “Against a backdrop of weak employment, high inflation and with tax rises on the horizon, we doubt the retail sector will be able to sustain this strength.”
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