Global Gold Supply To Grow 1% In 2025, Report Shows
News Summary
Metal Focus reports that global gold supply is expected to grow by 1% in 2025, primarily driven by fresh gains in mine production. Despite rising supply, jewelry fabrication demand is projected to decline significantly, by 9% in 2024 and a steeper 16% in 2025, with high prices deterring retail demand in price-sensitive regions like India and China. Nevertheless, the consultancy anticipates gold prices to set a new record annual average of $3,210 per ounce in 2025, largely driven by investor unease over the economic and geopolitical climate. Mine output hit an all-time high in 2024 and is set to increase slightly again in 2025, while recycling activity is expected to remain flat. Investment interest, particularly among institutions and Asian retail investors, remains strong, supported by de-dollarization sentiment and continued central bank buying, which reached a record 1,086 tons in 2024 and is projected at 1,000 tons for 2025. Additionally, AI-driven technology is boosting industrial demand, especially in the electronics sector.
Background
In 2024, global mine gold output reached an all-time high of 3,661 metric tons, with a slight increase anticipated to 3,694 tons in 2025, driven by new mining projects and sustained strength in countries such as Mexico, Ghana, and Canada. Recycling activity also hit a 12-year high of 1,368 tons in the same period, with substantial contributions from China. However, recycling is expected to remain flat in 2025 due to constrained near-market stocks and persistent bullish sentiment. Despite increasing supply, the surge in gold prices (with jewelry fabrication demand declining 9% in 2024 and projected to fall 16% in 2025) is primarily fueled by investor unease over economic and geopolitical uncertainties, de-dollarization sentiment, and continued central bank buying (a record 1,086 tons in 2024, and 1,000 tons expected in 2025). Fears regarding escalating U.S. debt, interest rate trajectories, and potential trade conflicts under the Trump administration have also contributed to this trend.
In-Depth AI Insights
Is gold's traditional role as a hedge being superseded by new drivers? - Traditionally, gold has been seen as an inflation or recession hedge. However, the article highlights that price increases are primarily driven by "investor unease over the economic and geopolitical climate" and "de-dollarization sentiment," rather than solely retail jewelry demand or inflation expectations. This suggests that under the Trump administration, geopolitical frictions, escalating US debt, and potential trade conflicts are solidifying gold's position as an "uncertainty hedge" beyond just an inflation hedge. - The sustained and significant central bank buying (for the fourth consecutive year, with a record in 2024) further validates gold's strategic value as a reserve asset for mitigating dollar risk and diversifying foreign exchange reserves. This represents a long-term structural demand transcending short-term economic cycles. Can industrial demand, particularly AI-driven, provide a sustainable floor for gold and alter its investment narrative? - The article notes that despite weak jewelry demand, industrial demand (especially in electronics) grew 9% in 2024 and is expected to grow another 3% in 2025, largely due to the AI-driven tech wave. This introduces a new, growing source of demand for gold, moving it beyond just a safe-haven asset or jewelry. If growth in AI and related high-tech industries remains robust, gold's industrial applications could act as a stabilizing factor for its price. - However, it's crucial to note that while growing, industrial demand constitutes a much smaller portion of total demand compared to investment and jewelry. Therefore, while it provides support, whether it can significantly shift gold's investment narrative from being primarily sentiment-driven to fundamentally driven remains to be seen. The declining trend in other industrial applications (like dental and decorative) also points to the complexity of structural shifts. What are the implications of sustained central bank gold buying for the global financial system amidst de-dollarization trends? - Four consecutive years of significant central bank gold purchases, especially in the current context of the Trump administration and rising US debt, signal potential global concerns about the dollar's status as the primary reserve currency. This is not merely a diversification strategy but possibly a strategic hedge against future uncertainties in the international financial order. - If this trend continues, it could further erode the dollar's dominance in global trade and finance, accelerating the formation of a multipolar monetary system. For investors, this implies a need to pay closer attention to the performance of non-dollar assets, and gold's strategic value in a new international financial landscape could be re-evaluated and elevated. It may also influence long-term interest rates and capital flow directions.