Gold Demand Breaks Record as Supply Lags
Gold demand has hit a record high as supply struggles to keep pace. A recent analyst poll projects another record-setting year, with 95% of central banks surveyed expecting to increase their global gold holdings in 2026.
Total gold demand, including over-the-counter transactions, surpassed 5,000 tonnes for the first time in 2025, leading to a record demand value of $555 billion. This surge was largely driven by investment activity, with global gold ETF holdings growing by 801 tonnes, the second-strongest year on record. Central banks have been a pivotal force, purchasing 863 tonnes of gold in 2025. While slightly lower than the more than 1,000 tonnes purchased in each of the three preceding years, this level of buying remains significantly above the historical average and is expected to continue with around 755 tonnes of purchases projected for 2026. This trend reflects a strategic shift to diversify reserves away from the U.S. dollar amid geopolitical uncertainty. The supply side has been slow to react to the surge in demand and prices. In 2025, total annual gold supply grew by only 1%. Mine production is estimated to have reached a new record of 3,672 tonnes, but recycling activity only saw a modest 3% increase despite a significant jump in gold prices. This supply and demand imbalance has fueled a bullish outlook for gold prices. The gold price set 53 new all-time highs in 2025. Forecasts for 2026 are strong, with some analysts predicting prices could reach $6,000 per ounce, driven by continued robust demand from both central banks and investors, persistent fiscal deficits, and geopolitical tensions. Investment in gold has shifted, with Exchange-Traded Funds (ETFs) becoming a dominant driver, particularly in the U.S. In 2025, U.S.-listed gold ETFs attracted 437 tonnes of demand, pushing their total holdings to a record 2,019 tonnes. This highlights a strong investor appetite for gold as a safe-haven asset and a tool for portfolio diversification. Emerging market central banks, including those of China, India, and Turkey, have been significant buyers as they seek to increase their gold reserves. For instance, the National Bank of Poland was the largest single buyer for the second consecutive year in 2025. This sustained purchasing from various nations underscores a broad-based move towards gold as a core reserve asset.
