Global gold supply is expected to grow by 1% in 2025, according to Metal Focus. The precious metals consultancy is expecting this growth from fresh gains in mine production.

The annual publication, which provides comprehensive data and forecasts for the gold market, notes the complex environment characterized by higher supply and a decline in demand from jewelry fabrication, which is expected to weaken by 9%.

Despite this demand factor, the consultancy anticipates gold prices to set a new record annual average of $3,210 per ounce, driven by investor unease over the economic and geopolitical climate.

In 2024, mine output rose to an all-time high of 3,661 metric tons and is expected to increase slightly again to 3,694 tons this year. This growth stems from new mining projects and the continued strength in countries such as Mexico, Ghana, and Canada. Recycling activity, which reached a 12-year high of 1,368 tons last year thanks to substantial contributions from China, is expected to remain flat in 2025 due to constrained near-market stocks and persistent bullish sentiment.

Regardless of the expected increase in overall supply, the market has limited room for maneuver, as the projected surplus of 840 tons is relatively modest in the context of global demand and investment flows.

Retail demand, however, is under pressure. Jewelry fabrication decreased by 9% in 2024 and is projected to decline by a steeper 16% in 2025, with the largest impact in price-sensitive regions such as India and China.

High prices are proving a deterrent, though some resilience remains in other regions when adjusting for the dramatic rise in value. Industrial demand has been surprisingly strong, especially in the electronics sector, where the surge in AI-driven technology has led to a 9% increase in consumption for 2024. This trend is expected to continue, with a further 3% growth anticipated this year. However, other segments, like dental and decorative applications, are showing signs of decline, reflecting ongoing long-term structural shifts.

Yet, investment interest remains strong, especially among institutions and Asian retail investors. Furthermore, a volatile global environment and a strengthening de-dollarization sentiment have driven diversification strategies. Fears regarding the escalation of U.S. debt, interest rate trajectories, and potential trade conflicts under the Trump administration have all contributed to this trend.

Central banks’ continued buying plays a notable role. In 2024, these institutions purchased a record 1,086 tons, while expectations for 2025 are set at 1,000 tons. It is the fourth consecutive year of banks buying, showing the importance of gold as a hedge against the risks mentioned above. Although Metal Focus notes that some price corrections may occur due to speculative activity, the broader outlook remains highly supportive.

Price Watch: SPDR Gold Shares (NYSE:GLD) is up 26.04% year-to-date.

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