Gold mine supply is entering a structural contraction phase. Global output fell 1.2% year-on-year in Q1 2026, according to Metals Focus, extending a trend that began in 2024 after several years of steady growth. Mature operations in South Africa, Australia, and parts of North America are seeing grade decline and depletion, while new projects face permitting delays and higher capital costs.
The average all-in sustaining cost (AISC) for gold miners has risen to approximately $1,380/oz in 2025–2026, up from $1,280/oz in 2023. Labor costs, energy prices, and declining ore grades are driving the increase. While still well below current gold prices, the rising cost floor is reducing the incentive for marginal producers to expand output.
Recycling supply, a secondary source that typically grows during high-price periods, has been disappointing. Scrap gold recovery was approximately 1,150 tonnes in 2025, below the 2020 peak of 1,300 tonnes. Consumer reluctance to sell into a rising market has kept recycling volumes muted despite prices near all-time highs.
Demand, by contrast, remains robust. Jewelry fabrication, central bank reserves, and investment demand (ETFs + bars/coins) collectively absorb over 4,800 tonnes annually. The supply-demand gap has been covered by existing inventories, but above-ground stocks are gradually declining. The physical market tightness is a key factor behind the relatively resilient gold price despite the rate headwind.
The structural supply contraction means gold’s price floor is rising even as macroeconomic headwinds persist. Buyers should assess the AISC floor as a long-term support level. Physical gold procurement for industrial applications may face tighter availability of premium-grade material. Consider securing forward delivery contracts rather than relying on spot availability.