Chart of the Week: Will the gold price continue to fall?
Demand softens as gold stays well above cost support.
This week’s insights come directly from Jon Mills & Alex Anderson in the Mining 2026 Q2 Industry Pulse.
Gold price lower but still materially above cost support
Gold retreated further for most of the quarter on lower investment demand but has recently recovered to USD 4,400 per ounce to end modestly down. ETF flows are driving the volatility, as they tend to be procyclical and the marginal buyers.
At more than double our estimate of long-run cost support, gold is still elevated due to concerns over tariffs, Western governments’ deteriorating fiscal balances, geopolitical tensions, and a weaker US dollar. These concerns are more than offsetting rising real interest rates, which increase the opportunity cost for investors to hold it.
The midcycle gold price is designed to value a gold miner using a realistic long-term assumption, rather than today’s gold price alone. The midcycle gold price is applied after year four while the gold futures curve is used in those first four years of forecasted cashflow.
The midcycle gold price reflects the long run cost of getting gold out of the ground and is the price needed to sustain global supply through the cycle. As prices rise (ie. gold price), higher cost suppliers (gold miners) are encouraged back into the market which increases overall supply. Overtime, the additional supply gradually pushes prices back down toward the long-term marginal cost. This is where supply and demand typically balance out in a normal market.
Jewelry and central bank demand trending down
Jewelry is traditionally the biggest source of demand, but strong prices are a headwind. hile irregular, central banks’ urchases are also trending lower but still elevated. This may continue as they diversify reserves while regaining control of inflation. Elevated prices drive rising recycled supply and closed mines being brought back online. Mined supply is also likely to rise from new developments.
