SunSirs: With Inflation Risks Weighing, Gold's Upward Trend Continues

Since the beginning of this year, the precious metals market has continued its strong performance, with gold and silver prices rising in tandem and continuously reaching new historical highs. However, the price movements of gold and silver have shown slight differences. In the first half of the year, the rise in precious metal prices was mainly led by gold. Since May, gold began to show a period of slower growth, and although it started its second upward trend of the year in September, its gains were weaker than those of silver.

At the beginning of this year, following Donald Trump's election as US president, market concerns about changes in the global trade environment persisted. Driven by anxieties over potential US tariff increases, gold prices continued to strengthen. Around the time of the Qingming Festival holiday, the US "reciprocal tariffs" stirred the entire market, and the impact of the US "trade war" on the market reached a temporary peak, with gold prices surging to a high of 836.3 RMB/gram. In early May, the US and the UK reached an agreement on tariff trade terms, and China and the US held trade talks in Geneva. The turmoil of the "trade war" gradually began to subside, and gold prices fluctuated within a narrow range for four months. At the end of September, concerns about a US government shutdown intensified and eventually materialized, and the US once again provoked a "trade war." Gold prices experienced another clear upward trend, reaching a high of 1,000 RMB/gram in mid-October. Influenced by the Federal Reserve's interest rate cut cycle, COMEX gold performed slightly stronger than Shanghai gold.

Driven by risk aversion, fund preferences are showing a rebound

From the perspective of large-scale capital flows, the holdings of the SPDR Gold ETF have shown steady growth, with overall holdings significantly higher than last year. At the beginning of this year, the SPDR Gold ETF holdings steadily increased from 870 tons. Amidst the US "reciprocal tariffs," market risk aversion continued to intensify, and fund holdings successfully surpassed the 900-ton mark in mid-March. Subsequently, fund opinions on gold began to diverge, and SPDR Gold ETF holdings mostly remained at the 930-950 ton level, with gold prices fluctuating within a narrow range. Starting in late July, fund bulls regained momentum, and market views gradually converged. SPDR Gold ETF holdings continued to grow, surpassing 1,000 tons at the end of September and continuing to accumulate thereafter.

Gold recycling is increasing, and gold supply is growing steadily

According to data from the World Gold Council, global gold supply has been on a continuous upward trend since 2022. Looking at the structure of gold supply, mined gold production has remained stable, while net producer hedging has shown significant fluctuations, and gold recycling has also been continuously increasing since 2022. This year, global mined gold production accelerated in the second and third quarters. Net producer hedging turned negative in the first quarter of 2024 and has remained negative since then, although the hedging volume has fluctuated considerably. With the rise in gold prices, the amount of recycled gold has increased, and in the first three quarters of 2025, gold recycling continued its overall upward trend.

Due to the inherent stability and consistency of mined gold, future mined gold production is expected to maintain a steady growth trend.  High gold prices will continue to stimulate hedging demand from producers, and gold recycling is also expected to see some recovery. Therefore, global gold supply is likely to continue to increase.

The structure of gold consumption is changing, and investment demand is expected to be positive

Currently, investment demand for gold is growing rapidly and has successfully become the largest category of global gold demand. Furthermore, gold holdings in ETFs and similar products remain at high levels, industrial demand is stable, and demand for jewelry is further contracting. Global central banks continue to increase their gold reserves, but the amount of gold purchased is lower than in the previous two years.  Among these countries, China, Turkey, and Kazakhstan are maintaining a relatively rapid pace of gold accumulation.

Looking at the specific demand components, with the rise in gold prices, global demand for jewelry began to cool down in 2023, showing continuous negative growth in 2024 and further contraction in 2025. The decline in jewelry consumption was most pronounced in major countries and regions such as India, China, and the Middle East. This was offset by increased investment demand for gold, which surged rapidly from the beginning of 2025 to a high level of over 470 tons per quarter, far exceeding historical averages and more than double the typical level. Industrial demand for gold showed a year-on-year contraction, with the pace of industrial demand remaining largely consistent with previous years. Gold investment demand in ETFs and similar products turned positive in the third quarter of 2024 and continued to increase, reaching its highest level since the third quarter of 2020. Overall, investment demand has become the dominant component of gold demand and the main driving force behind gold consumption in 2025.

In the future, the global gold demand structure will continue to be dominated by investment demand, reflecting a new consumption pattern. High gold prices will suppress demand for jewelry, and against the backdrop of overseas macroeconomic market volatility, risk aversion, consumption downgrading, and increased savings intentions, demand for jewelry is expected to contract further. The market uncertainties and "trade war" concerns stemming from the policies implemented by the Trump administration have largely been reflected in the capital markets. While safe-haven demand will still exist, its driving effect on consumption will diminish. The market has already fully priced in the Federal Reserve's current interest rate cut cycle, and the bottom of the US dollar has been established for the time being, weakening the support for gold prices from the global monetary market environment.

Overall, although the Federal Reserve is still in a rate-cutting cycle, the scope for further rate cuts is expected to be limited. The dollar has likely already reached its bottom in this rate-cutting cycle, weakening the dollar's support for gold prices. However, safe-haven demand, inflation hedging demand, and market concerns about the credibility of the dollar continue to drive gold prices higher over the long term.

As an integrated internet platform providing benchmark prices, on December 24th, SunSirs’ benchmark price for gold was 1,009.38 RMB/gram, an increase of 6.41% compared to the beginning of the month (948.59 RMB/gram).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.