Flat Production for Years
Since 2018, global gold production has remained around 3,600 tonnes per year. Even during COVID-19, production dipped slightly but quickly returned to the same level.

It has now been about seven years without any growth in gold production. This is significant because, while production has stagnated, the demand for gold has increased substantially.

Central Banks Are Buying More
In the past, central banks typically purchased around 400 tonnes of gold annually. However, they are now acquiring close to 1,100 tonnes each year, resulting in nearly a tripling of demand. With supply remaining flat and demand rising sharply, a clear imbalance has emerged. Generally, when demand outstrips supply, prices tend to rise.

Why Prices Are Rising
A fundamental market principle is that when demand for an item is high, but supply is insufficient, prices increase. This is precisely what is happening with gold. Since production has not grown and demand continues to rise, prices are climbing. This price movement is not random; it is grounded in real supply and demand trends.

How the Market Adjusts
As new gold becomes less available, buyers turn to existing gold held by individuals and institutions. These sellers do not rush to sell; they wait for more favorable prices. Consequently, fewer individuals are willing to sell at each price level, which continues to drive prices higher. This situation is similar to stock markets where a stock becomes scarce, forcing buyers to pay more to acquire it.

A Clear and Justified Trend
The current trend in gold prices is neither sudden nor surprising. It is a direct result of steady supply and rapidly growing demand. This scenario mirrors instances when a product becomes scarce while interest among consumers increases, leading to higher prices. The rise in gold prices appears justified, and this trend may persist if production remains stagnant and buying continues to escalate.

Are you keeping an eye on gold’s supply-demand story? Let us know your thoughts in the comments below! And if you found this blog useful, feel free to SHARE it with others who might benefit!

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