Gold stands apart from most commodities because its value is not tied to everyday consumption. Unlike oil or wheat, gold is not burned, eaten, or used up — it is stored, held, and transferred between owners. This makes its price behavior closer to luxury assets like prime real estate rather than traditional raw materials.
Gold’s Unique Supply Dynamics
Throughout history, nearly all 220,000 metric tons of gold ever mined still exist today. Most of it sits in central bank vaults, reserves, or in jewelry form. Annual mining only adds about 1% to this stock, meaning fresh production barely impacts the overall market.
Because of this, gold prices are less about physical supply and demand and more about ownership preference — who wants to hold gold and who is willing to let it go.
The Two Sides of Gold Buyers
Analysts divide gold buyers into two key groups:
- Long-term holders (Conviction buyers) – Central banks, exchange-traded funds (ETFs), and institutional investors who purchase gold consistently, regardless of price.
- Short-term buyers (Opportunistic buyers) – Households and individuals, particularly in nations like India and China, who buy during price dips.
The first group drives long-term market trends, while the second creates a natural floor that prevents steep declines.
Similarities With Luxury Real Estate
Gold’s behavior mirrors that of exclusive real estate markets. Just as the number of luxury apartments in Manhattan is limited, gold supply is relatively fixed. Prices rise not because of new supply but because of who can afford and is willing to buy at higher levels.
For both assets, the marginal buyer — the one most willing to pay — dictates the market.
Outlook: Gold’s Next Big Move
Recent research suggests that large, conviction-driven flows account for nearly 70% of gold’s monthly price changes. Every 100 tons of central bank or ETF buying can push gold prices up by around 1.7%.
With central banks increasing their reserves and ETFs showing renewed inflows, analysts expect prices to continue climbing. Forecasts now suggest gold could reach $3,700 per ounce by late 2025, and potentially $4,000 by mid-2026.
This reinforces the view that gold acts less like a consumable commodity and more like a long-term wealth-preserving asset, behaving much like luxury property markets across the globe.
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