June 8, 2026
Increased mine production, rising recycling, but declining overall demand—at first glance, not a typical environment for new price records. Nevertheless, the experts at Metals Focus forecast an average gold price of $4,920 per ounce for 2026, representing a 43 percent increase from the previous year. This apparent contradiction stems from a profound structural shift in the gold market that has far-reaching implications for the industry.
Bullion and coins overtake gold jewelry for the first time
The most significant change is taking place on the demand side: In 2026, physical investments in bullion and coins are expected to replace gold jewelry as the largest source of demand for the first time. This trend was already emerging in 2025, when physical investment demand climbed 16 percent to a twelve-year high—driven primarily by growth in China (up 28 percent) and India (up 17 percent).
At the same time, global jewelry production plummeted by 19 percent to a five-year low of 1,646 tons. For 2026, Metals Focus anticipates a further decline of 11 percent. The historically high price level is forcing consumers and manufacturers to opt for lighter pieces, lower karat grades, or more affordable alternatives such as gold-filled materials.
Consequently, gold is not disappearing from demand but is shifting its primary function from a consumer good to a pure investment product. Unlike jewelry purchases, this investment demand is far less price-sensitive and is primarily driven by motives such as asset protection, diversification, and hedging against currency risks and uncertainties.
Lower overall demand—but a higher gold price
Although overall demand is expected to decline in 2026 due in part to a slowdown in the jewelry sector, the high quality of buyers supports the projected price surge. Simply looking at total tonnage falls short in the current environment.
As early as 2025, gold-backed exchange-traded products (ETFs) recorded their highest annual inflows since 2020, at 803 tons. The driving forces behind this were tariffs, growing U.S. government debt, doubts about the Federal Reserve’s monetary policy independence, and geopolitical tensions. These factors will persist in 2026 and will be exacerbated by high stock market valuations and uncertainties regarding the long-term trajectory of the U.S. dollar. The precious metal is thus assuming an increasingly strategic role in investment portfolios.
Central banks are buying less—but still at unusually high levels
This strategic importance is also reflected in the behavior of central banks. Although net purchases fell by 22 percent to 848 tons in 2025, after having exceeded the 1,000-ton mark for three consecutive years, geographically broad-based demand remains well above pre-2022 levels.
Sales were limited to a few countries and served primarily to rebalance portfolios following the recent gold rally. Despite headwinds such as the ongoing energy crisis, Metals Focus expects historically high net purchases in 2026 as well. While the pace of buying is slowing, the trend toward greater diversification of official reserves remains intact.
Gold mines are producing more—but supply is slow to respond
On the supply side, global mine production reached a new record of 3,817 tons (up 2 percent) in 2025. Growth was driven by new mines, expansions, and higher contributions from small-scale mining. A further increase of 2.4 percent to 3,907 tons is forecast for 2026, with all regions except Oceania and Europe expected to grow.
Given the enormous price surge, this supply growth is nevertheless moderate and underscores that even strong price signals in the mining industry do not immediately lead to massive jumps in production. Compounding the issue is the fact that producers are grappling with significant cost increases: Global all-in sustaining costs (AISC) rose by 12 percent to $1,552 per ounce in 2025 due to inflation and taxes.
For junior companies, this means that while a higher gold price improves the profitability of projects, factors such as grade, location, and infrastructure are increasingly decisive for success in light of cost trends.
Why even record prices are barely triggering a recycling wave
The supply of recycled gold is also responding sluggishly. In 2025, the volume rose by only 2.8 percent to 1,404 tons—a 13-year high that is, however, subdued relative to price trends. A 5.1 percent increase is forecast for 2026.
This apparent contradiction can be explained by owners’ strong desire for security: precisely because of prevailing uncertainties, scrap gold is being sold less frequently. Paradoxically, the very factor driving prices is simultaneously limiting the additional supply that would normally cool the market.
The Iran War Delays the Next Uptrend
Short-term volatility remains a factor, however. Following new record highs at the start of 2026, a previously overbought market combined with shifting U.S. interest rate expectations led to a correction.
The war in Iran is further fueling inflation, which limits the scope for interest rate cuts in the U.S. and drives up bond yields. In the short term, this is a headwind for gold, although geopolitical conflicts usually support the metal. Metals Focus, however, expects the rally to return once the situation calms down. The underlying premise: Policymakers are likely to tolerate slightly higher inflation rather than jeopardize economic growth through overly restrictive monetary policy.
Conclusion: In 2026, it’s no longer just volume that counts in the gold market
The market environment for 2026 is more complex than a purely quantitative analysis of supply and demand would suggest. The buyer structure is changing, strategic players are acting less price-sensitive, and structural drivers such as global debt and geopolitical risks remain. At the same time, supply from mines and recycling is growing only slowly.
What is decisive, therefore, is not so much the absolute tonnage of total demand, but rather the fact that gold is undergoing a permanent shift from a consumer good to a strategic investment and reserve asset. The projected average price of $4,920 thus does not reflect mere exaggeration, but rather is an expression of a new, more resilient market structure.
