The global gold market is poised for notable changes in the coming years, as highlighted in the latest annual report by precious metals consultancy Metals Focus. The Gold Focus 2025 report reveals a projected 1% increase in global gold supply by 2025, driven primarily by higher mine production and steady recycling activity. This article delves into the key findings of the report, examining trends in supply, demand, pricing, and investment behavior.
Rising Gold Supply: A Record Year Ahead
According to Metals Focus, total gold mine production is expected to reach 3,694 tonnes in 2025, setting a new annual record and surpassing the previous year’s figure of 3,661 tonnes. This anticipated growth is largely attributed to new mining projects coming online, particularly in countries like Mexico, Canada, and Ghana. The 2024 figure already marked a 0.6% increase over the previous year, establishing a record at that time.
Recycling also plays a crucial role in the gold supply chain. In 2024, recycling contributed an additional 1,368 tonnes to the global gold supply, marking an 11% increase and the highest level in 12 years. China led this growth with a 26% increase in recycling, while many other regions also experienced double-digit growth, largely fueled by rising gold prices. However, constraints such as low near-market stock levels and strong safe-haven sentiment are expected to limit further growth in 2025.
Interestingly, India diverged from the global trend in 2024, experiencing a decline in scrap gold recycling. This was attributed to a rise in gold-backed loans, which reduced the incentive for individuals to liquidate their holdings.
Demand Outlook: A Significant Decline
Despite the uptick in supply, total global gold demand is forecasted to drop by 9% in 2025. A significant portion of this decline is attributed to the jewellery sector, which is projected to contract by 16%. This downturn follows a 9% fall in 2024, with China being a major contributor to the weakness. Excluding China, global jewellery demand fell only 1% last year, indicating relative stability in other regions.
Price sensitivity has emerged as a central factor in this decline, particularly in markets like India, where higher gold prices have curtailed consumption. The global average gold price rose by 23% in 2024 and is forecasted to climb an additional 35% in 2025, potentially reaching an all-time high of $3,210 per ounce—surpassing even the inflation-adjusted peak of 1980.
The jewellery sector’s net draw on bullion dropped by 34% in 2024, largely due to increased recycling that met part of the demand.
Central Banks: A Continued Buying Spree
Central bank demand for gold remained robust in 2024 and is expected to continue at elevated levels. Net official sector purchases reached a record 1,086 tonnes, driven by ongoing efforts toward “de-dollarisation” and a desire to diversify reserves away from U.S. dollar assets. Gross sales by central banks declined significantly in 2024, partly due to the absence of large-scale disposals.
Metals Focus projects that net central bank gold purchases will total approximately 1,000 tonnes in 2025, underscoring a sustained trend toward gold accumulation amid global macroeconomic and geopolitical uncertainty.
Investment Trends: Diverging Regional Patterns
Institutional investment in gold remained strong in 2024 and is expected to continue driving demand in 2025. Factors such as interest rate expectations, fiscal concerns in the U.S., geopolitical instability, and strong equity markets have contributed to gold’s appeal as a diversification tool.
Retail investment, however, showed mixed results. While demand from Asia remained resilient, Western markets saw notable declines due to higher gold prices discouraging consumer participation. Metals Focus notes a regional divergence in bar and coin investment patterns, with Asian markets showing continued interest even as Western investors pulled back.
Industrial Demand: Electronics on the Rise
Industrial demand for gold presented a mixed picture. Electronics fabrication, which represents the bulk of gold’s industrial use, rose by 9% in 2024. This increase was attributed to a rebound in shipments of electronic goods, broader manufacturing recovery, and rising demand related to artificial intelligence technologies. Looking ahead to 2025, Metals Focus projects a further 3% rise in electronics-related gold demand, despite potential headwinds from trade tariffs.
Other segments, however, showed contraction. Decorative and miscellaneous industrial uses declined by 1% in 2024, driven by reduced demand in major markets like India and Italy. Dental demand continued its long-term decline, falling by 5% in line with structural changes in the industry.
Costs and Inflationary Pressures
The report also highlights cost pressures facing the gold mining sector. Global all-in sustaining costs (AISC) rose by 8% in 2024 to $1,399 per ounce. This increase was attributed to inflation, higher input costs, and elevated royalty payments tied to rising gold prices. These cost dynamics are likely to persist in 2025, although high gold prices may offset margin pressure for producers.
Outlook for 2025: Higher Prices Amid Global Risks
Metals Focus forecasts that gold prices will continue to rise throughout 2025, with the average price expected to hit $3,210 per ounce. Several risk factors are likely to support this upward momentum, including potential shifts in U.S. trade and monetary policy, heightened fears of a trade war, ongoing geopolitical instability, and rising U.S. debt levels.
Despite the possibility of short-term volatility or price corrections, the broader outlook remains bullish. Metals Focus Managing Director Philip Newman emphasized the strategic role of gold in central bank portfolios as a hedge against systemic and geopolitical risk. He also noted the enduring strength of retail demand in Asia and the growing divergence in investment behavior between East and West.
The insights from the Metals Focus 2025 report provide a comprehensive overview of the evolving landscape of the global gold market. As supply rises and demand faces challenges, the interplay of various factors will shape the future of gold investment and consumption.
Disclaimer: The above references an opinion and is for informational purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned.
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