By: Creamer media

The yearly report, the latest edition of which was published this week, offers a comprehensive analysis of the global gold market. It includes historical supply-demand data from 2016 to 2024 and provides a detailed forecast for this year.

According to the report, total demand is projected to fall by 9% this year, led by a double-digit drop in jewellery demand.

In terms of price, gold is expected to achieve a fresh all-time high later this year on the back of economic uncertainty centred around US policy and ongoing geopolitical tensions, ongoing portfolio diversification, growing concerns about US debt and robust central bank gold demand.

The yearly average gold price is forecast to surge by 35% to a new record high of $3 210 in 2025.

In 2024, net official sector purchases of gold reached a new all-time high of 1 086 t, according to Metals Focus. This development was attributed to continued “de-dollarisation”, which drove central banks to increase their gold reserves.

The year also saw a marked decline in gross sales, in part owing to the absence of major disposals like those recorded in 2023 by Türkiye. Metals Focus noted that macroeconomic uncertainties are expected to maintain elevated levels of central bank gold purchases, estimating 1 000 t in net buying for 2025.

Mine production also contributed to the broader supply dynamic, with global mined output rising by 0.6% year-on-year to 3 661 t in 2024, setting a new record. This increase was supported by gains in Mexico, Canada and Ghana.

Costs associated with production also rose, with global all-in sustaining costs climbing by 8% year-on-year to $1 399/oz. This was attributed to inflationary pressures and higher royalty payments driven by increased gold prices. For this year, mined output is forecast to increase by 1% to a further record of 3 694 t, supported by the commissioning of new mining projects.

Recycling activity saw a strong performance in 2024, rising by 11% to reach 1 368 t, the highest level in 12 years. A significant share of this growth came from China, which experienced a 26% increase.

Most regions registered double-digit increases, driven by higher prices. India, however, saw a decline in scrap owing to a rise in gold loans. In other regions, gains were constrained by limited near-market stocks, a prevailing safe-haven preference and continued bullish price expectations.

Metals Focus expects recycling to remain flat in 2025, as many of the factors that constrained growth in 2024 are projected to persist despite rising prices.

Jewellery demand experienced notable declines, with global fabrication falling by 9% in 2024. This was largely owing to weakness in China. When China is excluded, demand fell by only 1%, indicating some resilience in other regions despite the 23% increase in average prices.

The overall net draw on bullion from the jewellery sector fell sharply by 34%, largely owing to an 11% increase in recycling. In 2025, fabrication losses are projected to deepen to 16%, as the rally in gold prices weighs heavily on price-sensitive markets such as India.

In the investment space, institutional demand remained positive during 2024. This was underpinned by expectations of lower interest rates and actual rate reductions, while heightened geopolitical instability, concerns surrounding US debt and strong equity market performance in the US all supported continued portfolio diversification into gold.

Retail investment remained steady overall, with increased demand from Asian investors offsetting substantial declines in Western markets, where higher prices weakened consumer activity.

Industrial demand for gold presented mixed results. Electronics offtake rose by 9% in 2024, driven by a rebound in electronic goods shipments, manufacturing expansion, and increased demand related to AI technologies.

Metals Focus projected a further 3% increase in electronics demand this year, despite anticipated challenges from tariffs. Decorative and miscellaneous industrial demand contracted by 1% in 2024, with key markets such as India and Italy showing declines.

Dental demand continued its long-term downward trend, falling by 5% over the year owing to structural shifts in the sector.

Metals Focus concluded that gold’s fundamentals remained sound in 2024. This was supported by robust central bank purchases, increased mine output, elevated recycling, and resilient retail investment in Asia.

Jewellery demand, though declining, reflected ongoing consumer interest when adjusted for the scale of the price increase. Meanwhile, industrial fabrication maintained growth, led by strength in the electronics segment.

Looking ahead, the consultancy identified several risk factors and trends likely to support gold prices in 2025. These include US trade policies under the current administration, fears of a trade war, fiscal instability in the US, and expectations of further monetary easing by the Federal Reserve.

Metals Focus forecast that gold would continue to post new records throughout the year, underpinned by investor caution and sustained official sector interest.

Metals Focus MD Philip Newman emphasised the strategic shift among central banks toward gold as a hedge against geopolitical and monetary risks. He also highlighted the regional divergence in bar and coin investment, the resilience of Asian retail demand, and the overall strength of gold as a non-yielding, safe-haven asset.

Newman noted that, while market volatility and corrections could occur, the broader outlook remained positive, with an average price forecast of $3 210/oz for this year, a level that would exceed the inflation-adjusted peak of 1980.