Global gold prices are projected to reach unprecedented levels in 2026, even as overall demand for the precious metal weakens and supply continues to expand, according to the latest annual outlook published by precious metals consultancy Metals Focus.
The firm forecasts that the average gold price will climb by 43% this year, reaching approximately $4,920 per ounce, supported by sustained investment demand and ongoing economic and geopolitical uncertainties.
Investment Demand Takes Center Stage
One of the most notable developments highlighted in the report is a structural shift in global gold consumption. For the first time on record, demand for physical investment products—including bars and coins—is expected to surpass jewelry demand and become the largest segment of the global gold market.
According to Metals Focus, investors continue to view gold as an attractive store of value amid concerns surrounding U.S. fiscal policy, elevated government debt levels, geopolitical tensions, and questions about the long-term strength of the U.S. dollar.
China and India remained key drivers of physical investment demand during 2025, with purchases of bars and coins increasing significantly as consumers favored wealth preservation over discretionary spending on jewelry.
Strong Performance in 2025
Gold delivered an exceptional performance last year, posting a 44% annual gain and recording its strongest yearly advance since 1980.
Although central bank purchases moderated from the extraordinary levels seen in previous years, official sector demand remained historically robust. Metals Focus noted that government institutions continue to regard gold as a strategic reserve asset, particularly as efforts to diversify away from dollar-denominated holdings persist.
The report also pointed to continued investor interest in exchange-traded gold products, supported by global market volatility and concerns about future monetary policy decisions.
Mine Production Reaches New Highs
On the supply side, global mine output expanded by 2% in 2025, reaching a record 3,817 tonnes.
Production growth was driven by new mining projects, capacity expansions at existing operations, and increased output from artisanal and small-scale mining activities.
Despite rising production, mining companies faced mounting cost pressures. Average all-in sustaining costs increased by 12% year-over-year, reaching $1,552 per ounce as inflation, higher royalties, and operational expenses weighed on profitability.
Looking ahead, Metals Focus expects another increase in mine production during 2026, forecasting global output of approximately 3,907 tonnes. Most producing regions are expected to contribute to this growth, with the exception of Europe and Oceania.
Recycling Continues to Grow
Gold recycling also strengthened in 2025, rising to 1,404 tonnes, the highest level recorded in more than a decade.
Europe accounted for much of the increase, while several other regions posted modest gains. However, weaker recycling activity in South Asia limited overall growth.
The consultancy expects recycled gold supply to rise further in 2026. Nevertheless, limited readily available stocks and investors’ preference to retain gold as a defensive asset are likely to prevent a more substantial surge in scrap flows despite elevated prices.
Central Banks Remain Key Buyers
Official sector purchases slowed in 2025, with net acquisitions declining to 848 tonnes, representing a four-year low.
Even so, Metals Focus emphasized that central bank demand remains historically elevated. Purchases were broadly distributed across numerous countries seeking greater reserve diversification, while sales were concentrated among only a handful of nations, primarily reflecting portfolio rebalancing after gold’s strong rally.
The report expects central banks to remain active buyers in 2026, supported by long-term reserve management strategies and ongoing concerns over global economic stability.
ETF Inflows Surge
Investment demand received additional support from exchange-traded products backed by physical gold.
Holdings in gold-backed ETFs increased by 803 tonnes during 2025, marking the strongest annual inflow since 2020.
Analysts attributed these inflows to a combination of factors, including trade policy uncertainty, rising U.S. debt burdens, geopolitical instability, and concerns surrounding the independence of monetary policymakers.
Demand for physical bars and coins also expanded sharply, reaching its highest level in more than a decade as investors sought protection from market volatility.
Jewelry Sector Faces Ongoing Challenges
In contrast to investment demand, the jewelry sector continued to struggle under the weight of elevated prices.
Global jewelry fabrication fell by 19% in 2025, dropping to a five-year low of 1,646 tonnes.
Consumers responded to higher prices by purchasing lighter products, shifting to lower-purity items, and in some cases substituting gold with platinum or gold-plated alternatives.
Metals Focus expects jewelry demand to weaken further during 2026, forecasting an additional decline of around 11%.
Industrial Demand Holds Steady
Industrial consumption of gold remained relatively stable last year.
Growth in demand from artificial intelligence infrastructure and advanced technology applications helped offset softness in traditional consumer electronics markets.
Meanwhile, other industrial and decorative uses of gold continued to contract, reflecting broader economic challenges and changing consumption patterns.
Long-Term Bullish Outlook Remains Intact
Although gold experienced a correction after reaching record highs earlier in 2026, Metals Focus believes the broader bull market remains intact.
The consultancy noted that shifting expectations for U.S. interest rates, combined with concerns about inflation stemming from the conflict involving Iran, contributed to higher bond yields and temporary pressure on gold prices.
However, analysts argue that the fundamental drivers supporting the metal have not disappeared. Geopolitical uncertainty, concerns over sovereign debt, questions surrounding the future role of the U.S. dollar, and persistent demand for safe-haven assets are all expected to continue supporting gold over the medium and long term.
As a result, Metals Focus maintains that gold is likely to resume its upward trajectory once current market disruptions ease, paving the way for additional record highs in the years ahead.
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