Strong demand in a high-price era: How key markets are reshaping gold & silver consumption

Resilient Demand Amid Record Prices

Gold and silver prices have shattered records in early 2026, with gold surpassing $5,600 per ounce and silver hitting a fresh all-time high of $120 per ounce, up 65% in January alone.

Yet, instead of dampening interest, these elevated levels have coincided with surprisingly strong demand from major consumers. Investors and central banks worldwide are piling in, viewing these metals as essential hedges against inflation, geopolitical tensions, and a weakening US dollar. In the West, particularly the US and Europe, portfolio allocations to gold are rising as economic uncertainties mount. Central banks in emerging markets have been especially aggressive, snapping up an estimated 585 tonnes of gold per quarter to diversify reserves away from traditional dollar holdings.

This trend defies conventional wisdom that sky-high prices would curb buying. Instead, physical shortages and persistent inflows into gold ETFs—especially in China and India—signal a fundamental shift. Silver, often called "gold on steroids," is outperforming even more dramatically, fueled by both investment fervor and explosive industrial use. Citi analysts predict silver could climb to $150 within three months, citing Chinese buying momentum and supply tightness.

China's Unyielding Appetite Drives the Surge

China stands out as the world's top consumer of physical precious metals, showing no signs of slowing despite the price frenzy. Gold ETFs there saw four straight months of inflows through late 2025, with holdings more than doubling to all-time highs. The People's Bank of China added 27 tonnes of gold last year, underscoring official commitment even as jewellery demand dipped slightly due to costs.

Silver demand in China has exploded, with Shanghai prices trading at $9 per ounce premiums over global benchmarks, highlighting acute physical shortages. A new export-licensing regime in January 2026 has further restricted refined silver outflows, tightening supply for booming domestic industries. From solar panels to electronics, China's push into green tech and manufacturing is voraciously consuming silver, reinforcing its role as a demand powerhouse. |quote| "The gains that we've seen over the last two years are unprecedented... driven by powerful forces like shifting geopolitical risks, de-dollarization, and investors returning to gold after ignoring it for years," says John Ciampaglia of Sprott Asset Management.

India's Transformation and Global Industrial Boom

In India, essential wedding-season gold buying—largely price-insensitive—has propped up physical demand, while ETF inflows hit historic levels amid global worries. Gold premiums reached a decade-high, reflecting intense local appetite. Silver consumption has skyrocketed 192% year-on-year, capturing about 25% of global supply for solar, electronics, and electric vehicle production. With gold prices too steep for some jewellery makers, silver is stepping in as a substitute, adding another layer to demand dynamics.

Globally, silver's industrial profile sets it apart. Solar manufacturing now devours vast quantities, with EVs and AI infrastructure piling on. Supply deficits have persisted for years, as silver mostly emerges as a byproduct of other mining, limiting rapid responses to demand spikes. This structural tightness, combined with safe-haven flows, positions silver for potential outperformance in 2026. Forecasts vary, but many see silver pushing toward $65 or higher, with some eyeing $150 if ratios to gold compress further. Gold, meanwhile, eyes $5,000 by year-end on sustained ETF and bar demand.

Economic surveys point to ongoing rallies unless major resolutions like durable peace or eased trade wars emerge. Loans against gold jewellery in places like India have jumped 125%, showing how rising values unlock liquidity. These patterns illustrate how key markets are rewriting the playbook for precious metals consumption—blending tradition, investment, and tech-driven needs.

In summary, strong demand from China and India, coupled with industrial surges and central bank buying, is sustaining gold and silver's momentum despite record prices. Investors should watch supply constraints and macroeconomic shifts closely as these forces continue reshaping the landscape.