BlockBeats news, on October 17, gold spot prices have declined approximately 27% from this year’s January high of $5,608 per ounce to around $4,112; silver has also dropped from its January high of $121.62 to around $56, a decline of more than 50%. However, the sharp price drop has not alleviated supply pressures in the physical market.
According to data from the World Gold Council, global central bank gold purchases reached 288.9 metric tons in the second quarter of 2026, setting a new record for the same period on record, a 62% year-over-year increase. Meanwhile, the Silver Institute forecasts that the global silver market deficit will expand to 46.3 million ounces in 2026, marking the sixth consecutive year of supply shortfall, with mine supply growth remaining relatively limited.
The demand structure is also changing. Although silver consumption in the photovoltaic sector is expected to continue declining, growth in demand from areas such as data centers, electric vehicles, and grid upgrades may partially offset the reduction in silver use for photovoltaics. Meanwhile, mine development cycles are long, making it difficult for new supply to quickly respond to changes in demand.
This round of price correction in gold and silver may reflect more the unwinding of speculative positions than a complete resolution of physical supply-demand imbalances. U.S. fiscal deficits, rising interest expenditures, and global central banks’ demand for diversified reserves may continue to provide long-term support for gold. However, changes in trade policies, weakening industrial demand, and new mining capacity coming online could still alter market dynamics.