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Gold saw a significant price rally over the course of 2025, after geopolitical uncertainty and heightened central bank buying drove more people to the safe haven asset.
Gold prices rallied 44 per cent last year, reaching $4,550 per ounce in December and recording 56 fresh record highs according to the latest report from Metals Focus.
It also marked the assets strongest performance since 1980.
The report credited the sharp rise to concerns surrounding global growth, inflation and supply chains, which caused investors to increase their gold allocations as a hedge to avoid stock market volatility.
Central bank’s pivot away from the dollar also buoyed the price, as despite being roughly one fifth lower than the prior three years, they “were still significantly higher than historical norms”.
Banks that were most active in boosting their gold allocation included Poland, which purchased 102t, China and Brazil.
Supply…
Global gold mining production increased by two per cent year on year to a record high of 3,817t, driven by a surge in new mines and project expansions.
Growth was primarily concentrated in Africa, Canada and South America, while production ultimately declined in North America and Asia off the back of low grade ores and operational disruption.
Despite the hike in price and production, recycling only saw a modest rise, inching up 2.8 per cent to 1,404t.
This was credited to restrained selling in key markets, as consumers opted to retain the safe haven asset amid global uncertainty.
However last year marked the highest levels of recycling since 2012.
… and demand
Jewellery demand remained repressed last year in response to surging prices, with consumers leaning towards lower-carat products and, in some cases, opting for other metals such as platinum.
A further shift towards investment products also contributed to jewellery’s decline, with Chinese demand plunging 28 per cent, as investors looked to purchase ETFs and bars.
Physical investment jumped 16 per cent on year, reaching 1,400t, its highest level in 12 years, driven by “bullish investor sentiment”.
But there was a divergence across different regions, with the strongest gains concentrated in East and South Asia, with Indian retail investment climbing 17 per cent, with analysts pinning the interest to struggling equity markets in Asia.
Industrial demand also remained flat, after gains from exposure to the AI boom were offset by weakness in consumer electronics, as soaring prices squeezed manufacturing budgets and reduced consumer spending power.
2026 outlook for gold
Gold continued to rally at the start 2026, remaining in demand particularly among retail investors who are yet to have exposure to the asset, with prices hitting a fresh all time high of $5,595 in late January.
But the nomination of Kevin Warsh as Fed chair in March caused the gold price to tumble, as his hawkish outlook eased concerns over Fed independence.
Professional investor appetite has also subdued amid the Iran war, with many being “disappointed by gold’s performance during a time of crisis” given its status.
But Metals Focus reaffirmed its optimism in the asset’s performance in the second half of the financial year, expecting that Iran and the US will reach a ceasefire.
