Gold Supply Falls In Q3 Despite Record Mine Production; What Happened?

Gold mine output set a record in the third quarter. However, gold supply fell by 1 percent.

What happened?

Gold mines globally produced 1,071 tonnes of gold in Q3. It was the highest third-quarter mine output in the World Gold Council’s data series dating to 2000.

Gold mine production is up 2 percent year-on-year and is on pace for an annual record.

Several of the world’s top gold producers reported significantly increased output.

Canadian mines reported a 22 percent increase in gold output. Analysts say production from recently commissioned mines, coupled with elevated output from existing mines, drove the increase.

Indonesia’s gold production increased 21 percent. According to the World Gold Council (WGC), the growth was primarily due to improved ore grades and higher production volumes at PT Amman Resources’ Batu Hijau operation. 

Chile and Ghana reported 19 percent and 13 percent increases in gold production, respectively.

While mines are producing more gold, the cost of digging it out of the ground is rising rapidly. Average all-in sustaining costs (AISC) reached a record high of 1,930 per ounce in Q2. That was an 8 percent quarterly increase and a 22 percent rise in costs over the last year.

According to the World Gold Council, it was the steepest annual rise in AISC since Q1 2013. Analysts noted that price inflation in the mining industry is accelerating much faster than the 5 percent five-year average.

“Gold miners have faced pressures from higher energy and consumable prices over the past year, while sustaining capex cost has also increased rapidly.”

If Mines Are Producing More Gold, How Did Supply Drop?

If gold production increased, how did total supply fall?

Recycling fell 8 percent in Q3 to 314 tonnes as gold prices dipped.

According to the World Gold Council, recycling trends continued into Q3 with European and U.S. recycling volumes remaining elevated, while volumes in other regions mostly declined in line with lower prices. The World Gold Council noted, “Expectations of higher gold prices over the medium to longer term also contributed to depressed recycling levels.”

“Anecdotal evidence suggests that holders of gold expect prices to recover or, in countries with weak currencies, that gold will continue to help protect them from further economic turmoil.”

Recycling in India remained depressed. Quarterly volumes were flat but fell 12 percent on an annual basis. WGC analysts say weak recycling volumes were due to lower gold prices, preference for pledging gold as collateral, and an increasing number of customers trading in old jewelry for new.

Exchanging old jewelry for new has no net impact on supply, and recycling data does not capture it.

Chinese recycling also dipped, falling 12 percent quarter-on-quarter and 20 percent annually. A 7 percent VAT on jewelry sales has incentivized trading old jewelry.

Meanwhile, recycling rose by 12 percent annually in Europe and by 8 percent in the U.S.

World Gold Council analysts said recycling trends reinforce their view that activity is more sensitive to recent price movements than to year-on-year comparisons.

“Though the average gold price in the quarter remained 23 percent above its Q3’25 level, it fell by 5 percent from the previous quarter. Recycling volumes have duly followed the more recent price direction, declining by 2 percent q/q and 8 percent y/y, consistent with the pattern seen in recent quarters.”

Producer de-hedging also dropped the gold supply by 17 tonnes in Q3.

Many gold miners hedge by entering into contracts to sell future output at a predetermined price. Hedging provides gold producers greater revenue certainty and protects them against unexpected drops in the gold price. However, miners forfeit the possible p

The Q3 hedging decline will likely reduce outstanding positions from 109 tonnes at the end of Q2 to approximately 92 tonnes.

According to the WGC, “The continued contraction is consistent with producers having limited appetite to lock in future prices, particularly where existing hedges are well below current spot levels.”

Looking ahead, World Gold Council analysts expect supply to contract slightly in 2026. While mine output is on pace for a new record, lower recycling volumes are expected to persist in Q4.

“Despite higher inflation and some signs of unemployment, there is still little evidence of distress-driven selling. While an uptick in recycling is likely, should Q4 see a strong price recovery, the risk of a sharp release of recycled gold seems low.”