Gold Demand Trends Q3 2021

28 October, 2021


Total supply fell 3% y-o-y in Q3 as sharply lower recycling offset mine production growth.

  • Q3 mine production increased 4% y-o-y to 960t, the largest quarterly production level on record and 3% higher than in Q3 20191  
  • Recycled gold supply fell 22% y-o-y and was 16% lower than in Q3 2019, owing to a lower gold price and depleted near-market supplies
  • On a y-t-d basis, total gold supply remains slightly below pre-COVID levels.
Tonnes Q3'20 Q3'21 YoY
Total supply 1,279.4 1,238.9 -3%
Mine production 919.0 959.5 4%
Net producer hedging -21.3 -18.6    -    -
Recycled gold 381.8 298.0 -22%

Source: Metals Focus, World Gold Council

Q3 mine production increased by 4% y-o-y as there were fewer COVID-19 production interruptions compared to last year. But underlying production growth was demonstrated by the 3% increase compared to 2019 pre-pandemic levels. A lower gold price during the quarter and evidence of depleted near-market supply of old jewellery saw recycled gold supply 22% lower y-o-y. Recycled supply has consistently fallen y-o-y in each quarter of 2021 so far. 

Mine production

Third quarter mine production is estimated at a record 959t. But due to downward revisions to the last two quarters, y-t-d production of 2,679t was slightly below the record set in 2018, when mine production reached 2,704t for the first nine months of the year. Q3’21 mine production was 9% higher q-o-q due to seasonal increase in output from high latitude alluvial operations and some back-loaded production profiles at some conventional operations in North America. Higher output from the vast copper-gold operations of Grasberg in Indonesia and Oyu Tolgoi in Mongolia contributed to this growth, continuing the theme from previous quarters of this year.


Continued recovery generated quarterly record mine production

Continued recovery generated quarterly record mine production

Quarterly global mine production, tonnes*

Continued recovery generated quarterly record mine production
Quarterly global mine production, tonnes*
*Data to 30 September 2021. Source: Metals Focus, Refinitiv GFMS, World Gold Council

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer

*Data to 30 September 2021.


Recovery from COVID-related disruptions has been a common theme this year, although this effect waned in the most recent quarter because the worst disruption occurred in the first half of 2020. Peru was an exception: Q3 production increased by 25% y-o-y, as COVID-19 had the most damaging impact in Q3’20. South Africa saw an 18% y-o-y increase in Q3’21 due to the long lead time in restoring production from deep underground operations. Canadian production increased 23% y-o-y due to the ramp-up of production from new projects, increased output at Detour Lake, and the return of Musselwhite to full production rates following a fire in Q1’19. 

Technical and safety issues were responsible for the most significant declines in output seen in the third quarter. Production fell 34% y-o-y in Mauritania after a mill fire at the Tasiast mine in June led to a suspension of milling operations. This is planned to be back online in Q4’21. In Turkey, lower grades at Kisladag and Oksut saw Turkish production down 18% y-o-y. Safety checks in mines in the Shandong Province, together with country-wide environmental pressure saw production from China down 6% y-o-y. The suspension of the Obuasi mine in Ghana following a fatal accident contributed to a 5% decline in Ghanian mine production in Q3’21. 

The costs of mining gold continued to increase in Q2’21, the latest available data. The average All-In Sustaining Cost hit US$1,067/oz in the second quarter, the highest level seen since 2014 and up 10% y-o-y. Total cash costs increased by 9% to US$776/oz. The main drivers of this cost pressure were producer currency strength; higher sustaining capital expenditure; lower grades and recovery rates; and input cost inflation. Some ongoing costs to mitigate the risks of COVID-19 also continue to be borne by mining companies. 

Despite the revisions to H1’21 mine production estimates – and in the absence of renewed COVID-19 disruptions – annual mine production is still on track to recover ground lost in 2020. Production ramp-ups at the underground block cave at Grasberg in Indonesia, new projects/expansions, and some higher grades in North America look set to more than offset ore reserve depletion and lower grades at other mines. 

Net producer hedging

It is estimated that gold miners reduced their aggregate hedged position by 19t in Q3’21. Initial estimates (subject to revisions once most companies have released quarterly reports) suggest a decline in the global delta-adjusted hedge book of 19t in Q3’21. After a smaller than expected contraction of the aggregate industry hedge book of 15t in the second quarter, the y-t-d decline is estimated at 25t, equating to a 77t decline since the start of 2020. 

A slightly lower average quarterly gold price, down 1% q-o-q, is not expected to have prompted major new hedging as producers appear to prefer to keep production exposed to the spot gold price. The only additions expected are from companies required to add new positions due to debt finance requirements. 

Recycled gold

Recycling remained weak in Q3’21 at 298t. In the third quarter, recycled gold supply was sharply lower, down 22% y-o-y and off 16% compared to Q3 2019. But recycling activity was 6% higher q-o-q at 298t despite the 2% fall in the average US dollar gold price over the period.


Recycling supply fell sharply y-o-y, partly in response to lower prices

Recycling supply fell sharply y-o-y, partly in response to lower prices

Quarterly y-o-y change in recycling supply, %, and quarterly average price, US$/oz*

Recycling supply fell sharply y-o-y, partly in response to lower prices
Quarterly y-o-y change in recycling supply, %, and quarterly average price, US$/oz*
*Data to 30 September 2021. Source: ICE Benchmark Administration, Metals Focus, World Gold Council

Sources: ICE Benchmark Administration, Metals Focus, World Gold Council; Disclaimer

*Data to 30 September 2021.


There are three major reasons for the decline in recycling during the third quarter.

  • The pullback in the gold price reduced the incentive to sell-back gold
  • Signs of economic recovery – or at least the prospect of a recovery as global vaccination levels rose – increased gold owners’ confidence in the future
  • There are signs from some markets that the stock of near-market recycling material has been depleted, or at least greatly reduced. 

Virtually every country saw y-o-y declines in the supply of recycled gold. The only notable exception was Sri Lanka, where the ongoing economic crisis triggered further distress selling. Two countries made the greatest contribution to the fall in recycled gold supply. Thailand, where distress selling rocketed in 2020, saw a return to more typical levels as economic prospects began to improve and the pool of gold to recycle had been materially drawn down. And in India, the supply of recycled gold halved y-o-y as the economy started to rebound, the annual monsoon rains ended strongly (with cumulative rainfall just 0.7% below long-term averages) and the average gold price was lower and relatively subdued compared with Q3’20. Indian recycling levels remain a little elevated, however, partly due to sales from gold loan companies, where some borrowers had defaulted. 

Q3’21 recycled gold supply fell slightly y-o-y in China but jumped by 27% q-o-q. The reasons for this appear to be seasonal: many manufacturers and refineries utilise the Shenzhen Jewellery Fair and associated events, held in September each year, to actively promote new products and designs to the trade; this often triggers jewellery retailer flows of unsold stock from previous campaigns. 

Most other regions, including Europe, the Middle East and the Far East, saw recycled supply declines. The US was the sole outlier: recycling flows were roughly flat. Although some areas of the US saw declines, driven by global trends, renewed access to previously shuttered retail outlets allowed some selling that hadn’t been possible during the pandemic.

We believe that recycling is likely to remain subdued over the next few quarters. The need for significant increases in the gold price, continued recovery in the global economy, and a smaller pool of near-market supplies create headwinds. In the first three quarters of 2021 a 12% y-o-y fall in recycled gold virtually offset the impact of rebounding mine production – which increased 5% over the same period – highlighting the importance of this component of the gold supply/demand balance. 


  1. Our quarterly data series goes back to Q1 2000.

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