Gold Demand Trends: Q1 2025

Total gold supply increased by 1% y/y to 1,206t in the first quarter. This was driven by record mine production of 856t – an all-time Q1 high in our data series, which dates back to 2000 – and despite a 1% y/y decline in recycling to 345t. Total supply was supplemented by a small increase in our estimates of the aggregate producer hedge book. As usual, there is room for future revision to the underlying elements of supply data: to production and hedging because not all mining companies have released their quarterly reports; and to recycling as the record price environment makes the task of accurately measuring exchange and recycling more challenging.

Mine production

Mine production of 856t in Q1 was a fraction (less than one tonne) above the previous Q1 record of 855t, set in 2016. On a q/q basis, however, production fell by 11%, due primarily to seasonal fluctuations.

Notable Q1 production increases – based on data available at the time of publication – were from the following countries:

• Chile (+45% y/y) after the Salares Norte mine returned to steady state operations following adverse weather in 2024
• Ghana (+11% y/y) due to expansion in existing operations, including Asante Gold’s Bibiani mine, together with higher output from the ramp-up of Shandong Gold’s Namdini operation
• Canada (+4% y/y) driven by ramp-ups at newer operations such as Cote and Greenstone and higher production from existing mines 
• China (+2% y/y) as higher gold prices boosted margins at lower grade operations.

In contrast, operations in some countries were hit by a mix of mining and geological factors, resulting in the following Q1 production declines:

• Turkey (-25% y/y) due to the ongoing suspension of activities at the Copler mine and production sequencing at the Oksut mine
• Indonesia (-16% y/y) due to mine sequencing at Batu Hijau as the mine enters Phase 8 of mining operations, necessitating high volumes of waste stripping
• Mexico (-9% y/y) as production was suspended indefinitely at the Los Filos mine after expiry of a land access agreement, while the Morelos mine saw a planned four-week maintenance shut down 
• Australia (-3% y/y) due to planned lower grades at a number of mines including Cadia Valley.

Now that all listed companies have reported full-year production it is possible to fully assess industry trends for 2024. Last year gold production rose by 1% to 3,673t, a new all-time record for gold mining, marking the first time since 2019 that major gold mining companies have delivered annual gold production in line with their start-of-year guidance. 

In Q4’24, based on the latest data available, average all-in sustaining costs (AISC) for the gold mining industry reached a record high, up 8% y/y to US$1,438/oz. Despite the rise, average AISC for the industry fell q/q in Q4’24 as tonnage treated was stable but average grades increased. This quarterly fall in industry AISC is unlikely to continue as underlying cost pressures remain, not least due to royalty payments that are tied to the gold price.

Net producer hedging

Net producer hedging in Q1 is estimated at 5t, based on available data. Some fresh hedges were reported during the quarter, linked to debt financing, while producers with existing debt commitments will need to replace expired hedges. However, overall hedging activity is likely to remain limited given investor preference for full exposure to elevated spot gold prices.

Recycled gold

Gold recycling in Q1 fell to 345t (-4% q/q and -1% y/y) despite the gold price reaching multiple new record highs. The decline in recycling was something of a surprise given the concurrent increase in the average quarterly gold price (+38% y/y and +7% q/q). But as we’ve explained previously, q/q changes in the gold price are arguably more important for recycling. 

At a country level we observed the following during the first quarter: 

• Recycling in India fell sharply, but there was a jump in exchange of old gold jewellery for new, and in the use of gold jewellery as collateral for loans  – a common reaction to rapidly rising gold prices. These uses of gold jewellery have no net impact on supply and are therefore not captured in recycling data 
• Mounting political and economic concerns fuelled higher recycling activity in South Korea. Tight supply conditions drove domestic prices to a large premium – as high as 17% – and this encouraged recycling flows 
• With the exception of strong flows in Germany, recycling activity in Europe was broadly steady. The UK was quiet in Q1’25, although some evidence of a rapid pick-up was seen in late March 
• China saw retailers clearing out 24- and 18-carat gold jewellery ranges in order to stock up with lighter, cheaper jewellery items 
• A large decline in Thailand, which almost offset strength in China, was largely due to base effects.

The volume of gold recycled has trended higher over the past two years and – on a rolling four-quarter basis – is just below the highest level seen over the past decade. But from a longer-term view, recycling volumes remain some way below the exceptional levels seen in 2011 and 2012, which is quite remarkable considering the gold price increase and larger retail holdings of jewellery compared to previous peaks.

A number of global themes help explain this relative stability in recycling volumes:

• Price expectations among gold holders appear to be positive, encouraging them to hold back as they anticipate further gains
• Many markets saw substantial selling-back last year as gold prices started to move rapidly higher, and this seems to have depleted near-market stocks in a lot of countries
• Currently, there is only limited evidence of distress selling
• In countries experiencing economic and political stress, a lack of alternative safe-haven options means that gold is viewed as the last asset to sell, rather than as a ready source of cash.

Gold has already made further substantial price gains in early Q2 and it will be interesting to see whether recycling supply responds. Perhaps slowing economic growth and rising unemployment will start to generate some distress selling, or perhaps recycling volumes will remain relatively light while unrelentingly positive sentiment towards the gold price persists. We discuss our expectations for annual recycling supply in the Outlook section.