BlockBeats News, October 17: After hitting a record high of $5,608 per ounce in January this year, spot gold 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 drops have not eased tight supplies in the physical market.

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

The structure of demand is also changing. Although silver consumption in the photovoltaic sector is expected to continue declining, growing demand from data centers, electric vehicles, and power-grid upgrades may partly offset the reduction in solar-related silver use. Meanwhile, mine development takes a long time, making it difficult for new supply to respond quickly to changes in demand.

This pullback in gold and silver prices may reflect the unwinding of speculative positions more than a complete easing of physical supply-and-demand imbalances. The U.S. fiscal deficit, rising interest expenses, and demand from central banks to diversify their reserves may also continue to provide long-term support for gold. However, changes in trade policy, weaker industrial demand, and the release of new mining capacity could still alter market trends.