According to Mining Weekly, precious metals consultancy Metals Focus (MF) stated in its latest report, Gold Focus 2025, that growth in gold production will drive a 1% increase in global gold supply this year. The annual report, released last week, provides in-depth analysis of the global gold market, including historical supply and demand data from 2016 to 2024, as well as detailed forecasts for the current year. The report projects a 9% decline in total demand this year, primarily due to a double-digit drop in jewelry consumption. Gold prices are expected to reach new all-time highs later this year, driven by economic uncertainty stemming from US policies and geopolitical tensions, portfolio diversification, growing concerns about US debt, and robust central bank demand for gold. The average gold price in 2025 is expected to surge by 35% to a record level of $3,210 per ounce. According to MF's data, official net purchases of gold reached 1,086 mt in 2024, a historic high. This trend is attributed to "de-dollarization," prompting central banks to increase their gold reserves. Total sales also declined significantly last year, partly due to the absence of large-scale disposals like those seen in Turkey in 2023. MF found that macroeconomic uncertainty will keep central bank gold purchases at elevated levels, with net purchases projected at 1,000 mt in 2025. Mine production is also a key factor in supply changes. Global gold production from mines reached 3,661 mt in 2024, a 0.6% increase and a new record high. Growth was primarily driven by Mexico, Canada, and Ghana. The increase in production was accompanied by rising costs, with global all-in sustaining costs (AISC) increasing by 8% to $1,399 per ounce. This is attributed to inflationary pressures from rising gold prices and increased royalty fees. This year, mine gold production is expected to grow by 1% to 3,694 mt, thanks to the commissioning of new mining projects. Gold recycling surged to 1,368 mt in 2024, an 11% increase and a 12-year high. The vast majority of this growth came from China, which saw a 26% increase. Most regions experienced double-digit growth, driven by rising prices. However, India saw a decline in gold scrap production due to increased gold credit availability. In other regions, limited near-market stocks, widespread risk aversion, and persistent bullish price expectations constrained growth. MF expects gold recycling volumes to remain flat in 2025, as the factors that limited growth in 2024 are expected to persist despite rising gold prices. Jewelry demand is expected to decline significantly, with global manufacturing gold use falling by 9% in 2024. This is mainly due to weak demand in China. Excluding China, demand only fell by 1%, indicating resilience in other regions despite the increase in average prices. Net demand for gold in the jewelry industry dropped significantly by 34%, primarily due to an 11% increase in recycling volume. In 2025, it is expected that the decline in manufacturing usage will widen to 16% as rising gold prices exert severe pressure on price-sensitive markets such as India. In terms of investment, institutional demand continued to grow in 2024. This was driven by expectations of interest rate cuts and actual interest rate reductions, while heightened geopolitical instability, concerns over US debt, and the strong performance of the US stock market all supported continued portfolio diversification into gold. Overall, retail investment remained stable, with growth in demand from Asian investors offsetting significant declines in Western markets, as rising prices led to reduced consumption. Industrial gold demand showed mixed results, with gold demand in electronics increasing by 9% in 2024, mainly due to a rebound in electronic goods deliveries, manufacturing expansion, and growing demand for AI-related technologies. MF forecasts a further 3% increase in gold demand for electronics this year, despite facing tariff challenges. In 2024, demand for decorative and other industrial uses contracted by 1%, with declines observed in major markets such as India and Italy. Affected by structural adjustments in the industry, dental gold demand continued its long-term downward trend, declining by 5%. MF concludes that the fundamentals of gold were robust in 2024. This was supported by strong central bank gold-buying intentions, growth in mine production, increased recycling, and the resilience of Asian retail investment. Although jewelry demand declined, after adjusting for the extent of price increases, it still indicated ongoing consumer interest. Meanwhile, manufacturing gold demand continued to grow, driven by the electronics sector. Looking ahead, MF analyzed the risk factors and trends supporting gold prices in 2025. These include the trade policies of the current US administration, concerns over trade wars, fiscal uncertainty in the US, and expectations of further monetary easing by the US Fed. MF forecasts that gold prices will reach new highs this year, supported by investor caution and rising interest from government sectors. Company manager Philip Newman emphasized that central banks are turning to gold to hedge against geopolitical and currency risks. He also highlighted regional differences in bar and coin investment, the resilience of Asian retail demand, and the overall potential of gold as a non-yielding safe-haven asset. Newman stated that despite potential market volatility and corrections, the outlook remains generally optimistic, with an average price forecast of $3,210 per ounce this year, a level that will surpass the inflation-adjusted peak of 1980.

After fluctuating at highs for two days, gold prices surged again today. Spot gold hit a historic high of $3,300 per ounce for the first time, soaring by $70 intraday, marking the third record-breaking session in nearly five trading days. Domestic gold prices also rose significantly, with many brand gold stores reporting prices for pure gold jewelry exceeding 1,000 yuan per gram, setting a new record. An industry insider told Caixin reporters, "The current prices have left the industry in a passive position." During a weekday visit to the Shuibei gold trading market in Shenzhen, Caixin reporters observed that customers were hesitant, whether for recycling or gold jewelry consumption. A stall owner said, "Gold prices are too high, and the recent foot traffic is indeed not as strong as before, making business more challenging." A representative from a gold wholesale company, a member of the Shanghai Gold Exchange, also noted that gold shipments had declined significantly compared to last week. On April 16, data showed that spot gold prices reached $3,317.89 per ounce, with an intraday increase of over 2%. The most-traded US gold futures contract also hit a new high of $3,334.2 per ounce. Domestic gold prices were also driven higher. On April 16, the most-traded gold futures contract on the Shanghai Futures Exchange rose to 782 yuan per gram, setting a new record. Spot gold prices denominated in yuan have risen by approximately 26% year-to-date, nearing last year's full-year increase. Brand gold stores such as Chow Sang Sang (00116.HK), Lao Feng Xiang (600612.SH), and Luk Fook Jewelry reported prices for pure gold jewelry exceeding 1,000 yuan. For example, Lao Feng Xiang's pure gold jewelry was quoted at 1,005 yuan per gram today, up by 16 yuan from the previous day. "The current rise in gold prices is essentially a reflection of the decline in US dollar credibility, the depreciation of the US dollar, and concerns about the stability of the global currency exchange system," said Song Yunming, chief analyst at Asaming International Economic Consulting, to Caixin reporters. He noted that Trump's tariff policies have been erratic, and the unresolved US-China tariff issue has drawn more attention, leading to a high consensus in the market about a global economic recession, which has kept gold prices elevated. From a market perspective, Asian gold buying power has been particularly strong this year, and China's central bank has increased its gold reserves for five consecutive months, with the likelihood of further increases, providing strong support for gold prices. The rapidly fluctuating market has significantly impacted gold recycling and end-use consumption. Caixin reporters observed that brand gold stores had few customers, with the high gold prices being a major factor suppressing consumption, in addition to the current off-season. In terms of gold recycling, a gold shop owner said that most customers are in a wait-and-see mode. Sellers are concerned that prices will rise further after selling, while customers who have already purchased and held gold are worried about a sharp price drop. "Recycling business has declined due to rising gold prices," said the representative from the gold wholesale company. There are two types of sellers: individuals, who would have sold earlier if they were concerned about prices, and jewelry stores clearing inventory, but with gold prices rising for so long, they are hesitant to restock, leaving little to clear. Additionally, with gold prices climbing, the funds available for purchasing gold are limited, reducing the amount that can be bought. For example, where 10 million yuan could previously buy 30 kilograms, it now only buys 12 kilograms, resulting in lower profits. With gold prices remaining high, how are gold-listed companies responding? Chow Tai Fook (002345.SZ) previously told Caixin reporters, "Regarding gold price fluctuations, our brand has a comprehensive supply chain management system and a flexible market strategy mechanism. We will continuously and dynamically assess industry trends, balancing cost changes and consumer experience through product innovation, intangible cultural heritage craftsmanship upgrades, and exclusive member benefits." A spokesperson for Chow Tai Fook (01929.HK) Jewelry Group told Caixin reporters, "Facing record-high gold prices, we will adjust our product portfolio according to market demand, offering different product series to meet customer needs, such as flexibly using various jewelry materials to create culturally rich and fashionable designs. We will also apply techniques like 5D hard gold to 'lighten' products while maintaining design and quality, providing more cost-effective options." Regarding whether the company will increase gold product prices again and how to mitigate the impact of rapid gold price increases on profits, the Chow Tai Fook Jewelry Group spokesperson said the company has a robust risk management mechanism to address gold price fluctuations and evaluates the prices of priced gold products at least every six months, considering factors such as production cost changes, market demand, and strategic positioning. Looking ahead, Song Yunming said, "If the US and China can return to the negotiating table on tariff issues, and the Russia-Ukraine issue can be resolved, sending positive signals to the market, gold prices may see a significant correction. Currently, I expect the year-end closing price for London gold to be between $3,200 and $3,400 per ounce."

Central banks and other institutions bought 228 mt of gold in the first quarter of 2023, up 176% year-on-year, according to the World Gold Council.