Analysis: Gold and silver experience significant pullback, but supply-demand imbalance still supports the future outlook for precious metals.

BlockBeats news, October 17 — After hitting an all-time high of $5,608 per ounce in January this year, the spot gold price has fallen about 27% 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 eased supply pressure in the physical market.

World Gold Council data shows that global central bank gold purchases reached 288.9 tonnes in the second quarter of 2026, a record high for the same period, up 62% year-on-year. Meanwhile, the Silver Institute expects the global silver market supply deficit to widen to 46.3 million ounces in 2026, marking the sixth consecutive year of supply deficit, while mine supply growth remains relatively limited.

The demand structure is also changing. Although silver usage in the photovoltaic sector is expected to continue declining, demand growth in areas such as data centers, electric vehicles, and grid upgrades may partially offset the impact of reduced photovoltaic silver usage. At the same time, mine development cycles are long, and new supply is unlikely to respond quickly to changes in demand.

This round of gold and silver price correction may reflect more the clearing of speculative positions rather than a complete easing of the physical supply-demand imbalance. U.S. fiscal deficits, rising interest expenses, and the need for central banks to diversify reserves may also continue to provide long-term support for gold. However, changes in trade policy, weakening industrial demand, and the release of new mining capacity could still alter market trends.