Gold's structural demand is undergoing a historic shift: physical investment in bars and coins is expected to surpass jewelry as the largest source of global gold demand in 2026, according to the latest market data. For overseas jewelry buyers—importers, distributors, and private-label brands—this signals sustained high gold prices, shrinking jewelry production, and a need to adapt sourcing strategies toward lighter, lower-carat designs or alternative materials.
Supply-chain impact
Global jewelry production slumped 19% last year to a five-year low, and the market anticipates another 11% decline in 2026. Consumers are trading down to lighter pieces and lower carat grades, a direct consequence of gold prices that have climbed beyond the budgets of many traditional buyers. For jewelry supply-chain professionals, this means tighter margins on gold-based products and growing demand for cost-effective alternatives such as sterling silver, stainless steel, or gold-plated brass.
Investment demand reshapes the market
Total global gold demand hit a record 1,231 tonnes in Q1 2026, worth roughly $193 billion. Physical investment in bars and coins is now expected to overtake jewelry as the largest single demand source. This shift is structural, driven by central bank buying and investor appetite, rather than a temporary spike. The technology sector also contributed, with demand rising 1% on the back of AI component manufacturing.
Central banks broaden their footprint
Central banks purchased an estimated 244 tonnes of gold in Q1 2026, above both the previous quarter and the five-year average. Poland led with 31 tonnes, targeting 700 tonnes total. Notably, central banks from Guatemala, Indonesia, and Malaysia entered the market for the first time in years. The World Gold Council forecasts full-year purchases of 700 to 900 tonnes, signaling a long-term diversification trend that supports gold prices.
Supply constraints intensify the squeeze
Total gold supply grew only 2% in Q1 2026, while mine production is projected at 3,907 tonnes for the year—modest against buying pressure. All-in sustaining costs climbed 12% last year to $1,552 per ounce. Higher prices have incentivized scrap recycling, but not enough to close the structural supply gap. For jewelry buyers, this means continued upward pressure on raw material costs.
What buyers should watch
The Federal Reserve's next move is critical. Markets price a 43% probability of a rate hike by December, which would strengthen the dollar and pressure gold. Goldman Sachs sees no rate cuts until 2027. However, if inflation peaks as Oxford Economics predicts, policy could shift. J.P. Morgan maintains a bullish medium-term target of $6,000 per ounce, conditional on geopolitical de-escalation and Fed easing. For now, gold sits at the intersection of record institutional buying and a restrictive monetary policy regime.
Source: Read the original report | Published: June 14, 2026