By Angelo Giuliano
Gold prices remain strong above $4,800 per ounce in early 2026. The rally that began years ago continues without slowing. Many believe it is driven only by news events or fear. In reality, the main force is a lasting mismatch between supply and demand. This creates true scarcity, keeping prices elevated and opening the door for further gains.
Mining gold has become much harder
For a long time, mines produced more gold each year. Then, several years ago, output reached its highest point ever—around 3,600 to 3,700 tonnes. Since that peak, yearly production has stayed almost the same. Even when prices doubled or tripled, miners could not deliver much more gold.
Older mines now contain less gold per tonne of rock, so more digging and processing is needed for the same output, raising costs sharply. New major deposits are rare. When one is found, turning it into a working mine takes 5 to 15 years due to exploration, permits, construction, and financing. Environmental rules, community approvals, and safety standards have become stricter in most countries. Together, these factors make it very difficult to increase supply quickly.
Some gold disappears forever
A significant part of mined gold goes directly to industry, above all to electronics and high-tech products. Smartphones, computers, servers for artificial intelligence, data centres, 5G networks, electric vehicles, and solar equipment all use small amounts of gold. It appears in connectors, switches, and circuit boards because gold conducts electricity perfectly and does not rust or wear out.
Once embedded in these devices, the gold is usually lost. When old phones, laptops, or servers are discarded, most of the tiny traces of gold end up in landfills or are not recovered during recycling. Jewellery owners and investors often sell old items when prices rise, but tech companies and everyday consumers rarely do. As a result, every year a noticeable quantity of gold disappears permanently from the available supply. This steady loss quietly tightens the market over time.
Demand shows no signs of fading
Central banks around the world keep purchasing gold to build reserves. They want to lower their reliance on the US dollar and protect against sanctions or economic pressure from other countries. Individual investors and large funds continue to buy physical bars, coins, and gold exchange-traded funds, with especially strong interest in Asia and emerging economies. Jewellery remains popular in many cultures despite the higher cost. The technology sector itself requires a steady—and slowly increasing—amount of gold to support new innovations and infrastructure.
BRICS and China: Building gold strength for a new system
The BRICS group (Brazil, Russia, India, China, South Africa, plus new members) is actively increasing gold reserves as part of a push to reduce dependence on the US dollar (de-dollarization). Together, BRICS countries now hold over 6,000 tonnes of gold—around 20–21% of global central bank reserves—with Russia and China leading (each over 2,000 tonnes officially, and China possibly much higher unofficially).
China's central bank (People's Bank of China) has been a major buyer. It added gold for 14 straight months through late 2025, reaching about 2,303 tonnes officially by Q3 2025, with estimates suggesting true holdings could be 4,000–6,000 tonnes or more when including non-public channels. In 2025, China and other BRICS nations like Brazil continued purchases, adding dozens of tonnes even as prices hit records.
BRICS is using this gold to build financial independence. They are developing systems for trade settlement in local currencies or gold-linked mechanisms, reducing dollar use in cross-border deals. Some reports discuss a potential gold-backed digital trade unit or settlement architecture for BRICS trade, where gold acts as a reliable backing or collateral to make transactions more stable and less tied to Western systems. This helps protect against sanctions, currency volatility, and dollar dominance. China also promotes its digital yuan (e-yuan) with incentives, linking it to broader de-dollarization efforts where gold provides a strong foundation.
Shortages happen almost every year
Because supply cannot grow fast while demand holds firm, the market faces shortages almost every year. Analysts estimate these annual shortfalls at several hundred tonnes. Fresh mine production plus recycled gold falls short of total buying needs. The difference is covered by using up existing stocks or through private transactions that are not always public. Either way, the outcome is the same: less gold available in the long run pushes prices upward.
Geopolitical issues add more pressure
Trade disputes, new import taxes, sanctions, ongoing regional conflicts, and efforts by some countries to reduce use of the US dollar create uncertainty and worry. In such times, gold stands out as one of the few truly neutral assets. No single government owns or controls it. It is viewed as safe and independent. When global stability feels at risk, more central banks, institutions, and private buyers turn to gold for protection.
A new and lasting reality
The current situation with gold is straightforward but strong. Mines have reached their natural limit and cannot expand much further. A portion of production is consumed and lost forever in modern technology. Demand from central banks, investors, jewellery buyers, and industry remains solid and sometimes grows—especially as BRICS nations like China build gold reserves and explore gold-backed or collateralized systems for trade. This leads to yearly shortages that keep building. At the same time, world tensions keep adding extra demand.
This is not a temporary spike. It is a new and lasting reality: limited supply meeting steady, often increasing, demand. As long as these conditions continue, gold is positioned to maintain high prices and has room to rise further. For many people and institutions today, gold is more than an investment. It has become an essential way to preserve wealth in a world that feels more uncertain and divided every day.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Angelo Giuliano:
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