Gold is likely to continue playing an important role in central banks’ reserve portfolios in 2026. According to the World Gold Council, indications suggest that not only will already active central banks remain present in the market, but new buyers may also emerge.

Precious metals are having a moment. Gold and silver surged to record highs in January, benefiting from an alignment of macroeconomic factors, evolving supply-demand dynamics, and renewed industrial demand.

China’s net gold imports via Hong Kong in January rose by 68.7% from December, Hong Kong Census and Statistics Department data showed on Friday.

The current year has proven exceptional for gold by any metric.

(Kitco News) - Gold’s dramatic pullback amidst its record-setting rally has rattled markets, but according to Metals Focus, the recent turbulence should not be mistaken for the end of the bull market.

Citi said 'on Friday that the gold investment allocations were being influenced by a wide range of geopolitical and economic risks. However, around half of these risks may disappear later in the year.

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.

According to Wells Fargo's mid-2025 outlook report, precious metals will continue to benefit from geopolitical conflicts and economic uncertainties, with gold prices expected to hit a record high of $3,600 per ounce in 2026. Analysts noted in the report that the significant correction in commodity prices presents attractive opportunities later this year and into 2026. Additionally, they anticipate that improvements in the US economic conditions later in 2025 will drive growth in commodity demand. Wells Fargo recommends that investors pivot to sectors that may benefit from an improving macro environment, such as energy or precious metals, and adjust their portfolios to hedge against policy and geopolitical uncertainties. Exercise patience Wells Fargo emphasized in the report that rapid changes in economic policies over the past few months have disrupted investors and capital markets. Since the 2024 US elections, uncertainty surrounding US economic policies has continued to escalate, primarily due to tariff volatility, with recent uncertainties surpassing those during the COVID-19 pandemic. Analysts highlighted that these uncertainties are expected to continue driving gold prices higher over the next two years, as private investors and global central banks will continue to purchase gold. By 2026, central banks alone are expected to account for 21% of global gold demand. Meanwhile, US short-term interest rates are expected to decline in 2026, and the US dollar is also expected to rebound mildly, which will further strengthen the upward trend in precious metal prices. However, analysts also caution that investor optimism about precious metals' rise has reached levels historically preceding significant corrections, leading them to prefer exercising patience and waiting for price dips before buying. The bank expects gold prices to pull back slightly to a range of $3,000 to $3,200 by the end of this year, with the outlook for gold prices rising to $3,600 per ounce by the end of 2026. Analysts also recommend that investors focus on quality factors rather than speculative assets and diversify their portfolios through commodities like precious metals, which may outperform broader market indices. Chantelle Schieven, Managing Director of Capitalight Research, also believes that due to the resilience of the US economy and labour market, gold prices may stagnate throughout the summer but will oscillate near high levels. However, considering the inflationary impact of tariffs, she expects the US to face stagflation risks over the next two years, which will support gold prices.

For decades, Marc Faber, a seasoned investor who calls himself "Dr. Doom," has been buying gold and advising others to hoard it as well. Faber can be described as a "gold enthusiast" who often sounds the alarm about economic collapse. Recently, he has been focusing on a series of looming crises: debt crises, plunging asset prices, and soaring inflation. "My feeling is that a debt crisis is inevitable," he said. Ordinary investors are also going "crazy." Meanwhile, he himself has been regularly purchasing gold, which, according to him, accounts for 25% of his total investment portfolio. Moreover, a significant portion of Faber's clients' wealth is also held in gold. However, the latest signs indicate that the gold-buying frenzy that has driven up gold prices this year is spreading to more ordinary investors. Faber pointed out that this can be attributed to the negative sentiment in the economy in 2025. Despite the economy's continued stabilization, "soft data" such as consumer confidence and inflation expectations are still deteriorating. Although some of the "worst-case scenarios" may not materialize, the expected surge in demand from "nervous buyers" is not expected to end soon. Currently, gold investors are emerging in the US and overseas. Data from the World Gold Council shows that in Q1 2025, global gold bar demand climbed to 257 mt, a 13% increase from the same period last year. Joe Cavatoni, a market strategist at the World Gold Council, said he believes concerns about the US dollar, the weakness of the US economy, government debt, and deficits are among the reasons for the rise in gold demand. Meanwhile, events such as Trump's indiscriminate use of "tariff sticks" and Moody's downgrade of the US debt rating have also led to a significant increase in investment interest in gold bars. Genesis Gold Group is a gold dealer. The company said that in the past few quarters, there has been a surge of interest in gold. The demand for gold has been so robust that the company has introduced a type of gold bar designed for crisis situations, which can be broken into smaller pieces for easy trading during crises. Jonathan Rose, the company's CEO, said that after the presidential election, demand for such gold bars surged briefly, and then spiked by 20% in Q1 2025, around the time when President Donald Trump began formulating tariff policies. Rose said, "An increasing number of clients investing in gold are requesting physical gold to be delivered to them." He estimated that the proportion of clients insisting on holding physical gold has surged from 20% in past years to 70%. Gold Price Rally Not Over Yet In summary, gold's performance this year has been evident to all. Gold prices have risen by 25% in 2025, easily outperforming the S&P 500, which has fallen by approximately 1% year-to-date. Michael Boutros, Senior Technical Strategist at financial services firm StoneX, said that although there may be a slight sense of "overcrowding," gold demand will remain strong as long as there is economic uncertainty. He believes that even if trade agreements are finalised, investors will still be nervous as they await the economic impact of tariffs. "The more volatile the situation, the easier it is for gold prices to hold their ground," he said, referring to the gold price trend. Cavatoni from the World Gold Council added, "We believe that the support levels and upward trajectory for gold prices in 2025 are in a very favourable position."

[SMM Commentary: Precious Metal Futures and Stocks Performed "Remarkably" This Week, While Spot Silver Trading Remained Sluggish. How Do Major Institutions View the Market Outlook?] On May 23, amid intensifying market concerns over the deterioration of the US fiscal outlook, a weaker US dollar, and ongoing unrest in the Middle East, market risk-averse sentiment surged, driving precious metal futures and stocks to rise in tandem. In the futures market: As of 16:15 on May 23, COMEX gold rose by 1.01%, closing at $3,328.4 per ounce; COMEX silver rose by 0.7%, closing at $33.45 per ounce; SHFE gold rose by 0.1%, while SHFE silver fell by 0.37%, and silver T+D fell by 0.39%. In the stock market: On the 23rd, as the broader market experienced a nearly 1% decline, the precious metals sector bucked the trend and strengthened, ultimately leading the gains across all industries with a 1.96% increase.