May 2026 gold market overview: navigating a consolidating landscape

Subdued investor interest and margin cuts 

Recently, precious metals have been "treading water" as historical and implied volatility eases. In response to this declining volatility, the CME Group reduced margin requirements for precious metals futures on April 24th. 

• The margin for holding gold fell to 6% of notional. 
• Silver and platinum margins were lowered to 11%. 
• Despite these cuts, daily trading volume remains depressed, dropping approximately 70% in the last fortnight of April compared to late January. 

This lack of active investor turnover has led to a steady exit of bullion from COMEX- approved vaults. 

Supply reaching record highs amid rising costs 

The gold supply landscape saw significant milestones in 2025, with mine output reaching a record 3,814.6t. This momentum carried into the first quarter of 2026, with an estimated production of 884.7t, marking a 2.4% year-on-year increase. 

• Growth drivers: Increased output in Ghana, Canada, and Indonesia, alongside improved data for artisanal mining, supported these levels. 
• Production challenges: Fatality-related stoppages in China and weather disruptions in Australia have tempered some growth. 
• Rising costs: The all-in sustaining cost (AISC) for gold rose to USD 1,706/oz by the end of 2025, driven by higher capital expenditure and royalty payments. 

Total gold supply for 2026 is projected to reach 5,175t, a modest 0.6% increase from the previous year. 

Divergent demand: jewellery vs. investment 

Demand for gold in early 2026 has been a tale of two sectors. While jewellery consumption has struggled, investment in physical gold bars has shown remarkable strength. 

Jewellery demand hits multi-year lows 

Jewellery demand fell to 335t in the first quarter, its lowest level since the pandemic. This decline was largely due to: 

• High gold prices. 
• VAT changes in China and tariffs in the US. 
• Geopolitical tensions in the Middle East. 

Bar and coin demand soars 

Conversely, bar and coin demand jumped 42% year-on-year in Q1 to 473.6t. China led this charge, accounting for 43.7% of global demand as investors shifted away from weak- performing assets and toward gold for portfolio protection. 

Central bank activity and macro outlook 

Official sector buying remains a critical pillar of the market. Central banks purchased 243.7t in the first quarter of 2026. Countries like Poland, Uzbekistan, and Kazakhstan were prominent buyers, reflecting a sustained interest in gold amid elevated geopolitical and economic risk. 

From a macroeconomic perspective, US fiscal imbalances and a deteriorating current account are expected to weigh on the US dollar over the long term, providing a persistent tailwind for gold prices. While the short-term outlook may see metals retesting their 200- day moving averages, the clearing of speculative excess suggests the market is well- placed for a recovery once investor attention returns to these fundamental imbalances. 

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