Why the Gold Bull Market Still Has Legs in 2026 Despite Rising Supply Risks

The gold market in 2025 has defied conventional wisdom, with prices consistently trading above $4,300 per ounce despite rising supply-side challenges. This resilience is not a temporary anomaly but a reflection of deepening structural forces reshaping the global economy. As we approach 2026, the confluence of geopolitical tensions, central bank demand, and underinvestment in gold exploration creates a compelling case for continued upside in gold prices-and by extension, strategic mining sector investments.

Macroeconomic Tailwinds: Geopolitical Uncertainty and Debt-Driven Demand

Gold's appeal as a safe-haven asset has been turbocharged by geopolitical fragmentation and global debt concerns. The Bank for International Settlements (BIS) notes that central banks in emerging markets have increased gold purchases to diversify reserves and hedge against sanctions risks, with official sector demand accounting for over 20% of global gold demand in 2024. This trend is unlikely to abate, as geopolitical tensions-from the Middle East to Eastern Europe-continue to erode trust in traditional safe-haven currencies.

Simultaneously, the U.S. dollar's dominance is under pressure. Fiscal concerns, including rising federal deficits and trade policy uncertainties, have weakened the dollar's role as a global reserve asset. This erosion of confidence has pushed investors toward gold, which has decoupled from traditional correlations with real interest rates since the 2022 invasion of Ukraine. Meanwhile, gold ETF inflows surged to $72 billion by the end of 2025, with North America accounting for 62% of this demand. These flows reflect a broader reallocation of capital into non-yielding assets, driven by elevated correlations between stocks and bonds-a structural shift that favors gold's role as a portfolio diversifier.

Supply-Side Constraints: A Perfect Storm of Underinvestment

While demand factors are robust, supply-side challenges are compounding gold's bullish case. According to Kitco, global mine production grew by just 1% in 2024, the slowest pace in over a decade. Exploration investment has plummeted, with gold-specific budgets declining 7% in 2025, and grassroots exploration accounting for only 22% of total non-ferrous exploration spending-the lowest share in history. This underinvestment is not merely a short-term issue but a structural problem. As Ross Beaty, a mining industry veteran, warns, the lack of new discoveries and the rising costs of mine development (including higher fuel use and extended permitting delays) are creating a "supply gap" that will persist for years.

The implications are clear: Gold's supply constraints are tightening faster than demand pressures. Secondary supply from recycling has failed to offset the shortfall, with mine output remaining the primary source of new gold. This imbalance has already pushed prices to a structural floor of $4,000 per ounce, and further gains are likely as exploration underinvestment lags behind demand growth.

Strategic Mining Sector Positioning: A Path to Outperformance

For investors, the key lies in strategic positioning within the mining sector. Beaty emphasizes that gold miners with strong balance sheets and professional capital allocation are best positioned to capitalize on the current cycle. This is not a market for speculative junior miners but for companies with disciplined exploration programs and operational efficiency. The BIS estimates that a mere 1% reallocation of global equities and bonds into gold could inject $2.5 trillion into the market, pushing prices toward $5,000 per ounce by 2026. Such a scenario would disproportionately benefit miners with low-cost production and exposure to high-grade deposits.

Gold ETFs also offer a compelling alternative for those wary of equity volatility. With global ETF inflows already surpassing $72 billion in 2025, these vehicles provide direct exposure to gold's price action without the operational risks of mining stocks. However, for investors seeking higher returns, selectively investing in undervalued miners with strong exploration pipelines could amplify gains as supply constraints persist.

Conclusion: A Structural Bull Market with Legs

The gold bull market of 2025 is not a fleeting phenomenon but a structural shift driven by macroeconomic tailwinds and supply-side constraints. Geopolitical tensions, central bank demand, and the dollar's weakening credibility have created a perfect storm of demand-side momentum. Meanwhile, underinvestment in exploration and mine production has left the supply side vulnerable to further tightening. For investors, the path forward lies in strategic positioning-leveraging gold ETFs for direct exposure while selectively allocating capital to well-managed mining equities. As Ross Beaty aptly notes, this is a cycle where patience and discipline will be rewarded.