Global gold mine production reached an all-time high in the first half of 2026, coinciding with a sharp rebound in demand from central banks and institutional investors. According to data from the World Gold Council (WGC), mine output rose 2% year-over-year to 966 metric tons in the second quarter, bringing the first-half total to 1,867 tons across major producing regions. This supply milestone occurred as all-in sustaining costs climbed to a record $1,785 an ounce in the first quarter, up 16% from a year earlier, driven by higher royalties, corporate overheads, and energy costs linked to Middle East hostilities.

Production Expansions Drive Supply Growth

Key operational expansions contributed significantly to the global supply increase. Agnico Eagle Mines Limited’s Detour Lake expansion supported Canada’s production growth, while Gold Fields Limited’s Salares Norte project in Chile reached steady state. Additionally, Newmont Corp.’s Ahafo North ramp-up bolstered output in Ghana.

Looking ahead, Australia is positioned to capture a significant share of market expansion. Surbiton Associates Director Sandra Close described Australia as likely the largest producer of newly mined gold globally, citing a pipeline of developments including Northern Star’s doubling of treatment capacity at Kalgoorlie and Newmont’s expansion at Tanami.

Central Banks and Tether Lead Demand

Demand from official buyers rebounded strongly as gold prices declined from record highs near $5,600 per ounce to below $4,000 per ounce. Central bank net purchases jumped 62% year-over-year to a second-quarter record of 289 tons, which is five times the revised first-quarter total of 57 tons. Poland’s central bank purchased 51 tons, bringing its first-half total to 82 tons and its overall reserves to 632 tons, nearing its 700-ton target. The People’s Bank of China added 33 tons during the period.

Louise Street, senior markets analyst at the WGC, noted that central banks will remain significant buyers, albeit at a slightly slower pace than seen over the last four years. In parallel, China’s commercial imports surged to approximately 173 tons in June, the highest level since March 2024. Jinrui Futures analyst Zijie Wu attributed this to investors buying the dip as prices corrected.

Institutional Accumulation Continues

Outside the public sector, stablecoin issuer Tether emerged as a notable buyer in the second quarter. At the end of the quarter, Tether held a physical gold stockpile of 146 tons, valued at $18.8 billion. Chief Executive Officer Paolo Ardoino stated that the company added 14 tons of physical gold during the period, while also remaining one of the world’s largest buyers of U.S. Treasuries and reducing secured lending by $2.38 billion.

What the Numbers Show

The divergence between rising production costs and strong institutional buying highlights a structural shift in gold demand. While all-in sustaining costs hit a record $1,785 per ounce, indicating pressure on miner margins, central banks and entities like Tether are accumulating assets aggressively during price corrections. This suggests that despite higher extraction costs, the perceived value of gold as a reserve asset remains robust among major global buyers.

The World Gold Council has reported that India's gold demand declined 6% year-over-year during the June quarter, with weaker jewelry purchases identified as the primary driver of the contraction. The council's findings also highlight the unintended consequences of India's gold import tariff being raised to 15%, which has been linked to a surge in grey-market activity and significant damage to legitimate trade channels.

Demand Decline in the June Quarter

India's overall gold demand registered a 6% year-over-year decline in the June quarter, according to the World Gold Council. The report attributes this drop chiefly to reduced jewelry purchases, indicating that consumer appetite for gold ornaments softened during the period. The following table summarizes the key findings reported by the World Gold Council:

Impact of the 15% Import Tariff on the Sector

Beyond the demand figures, the World Gold Council's report raises significant concerns about the impact of India's gold import tariff, which has been raised to 15%. According to the council, the elevated duty has contributed to a surge in grey-market activity, with increased smuggling of gold into the country emerging as a direct consequence. This illicit activity has been identified as a source of considerable harm to legitimate businesses operating within India's formal gold trade ecosystem.

The combination of subdued consumer demand and the distortive effects of the 15% import tariff presents a challenging environment for India's organized gold industry. The World Gold Council's findings underscore the linkage between policy-driven cost increases and the diversion of trade toward informal and illegal channels, which undermines compliant market participants and erodes the integrity of the formal sector.

Key Takeaways

• India's gold demand fell 6% year-over-year in the June quarter.
• Lower jewelry purchases were the primary contributor to the demand decline.
• India's gold import tariff has been raised to 15%, contributing to grey-market growth.
• The elevated tariff has been linked to a rise in smuggling activity, harming legitimate businesses.
• The findings were published by the World Gold Council.