(Kitco News) - The gold market is seeing surging selling pressure as the U.S. economy created far more jobs than expected, raising expectations that the Federal Reserve has room to raise interest rates to cool inflation.U.S. nonfarm payrolls rose by 172,000 last month, according to the Bureau of Labor Statistics. The monthly figure significantly exceeded consensus forecasts, with economists expecting job gains of around 85,000.At the same time, April’s employment data saw a significant upward revision, with the government reporting that 179,000 jobs were created that month, compared with the initial estimate of 64,000.Meanwhile, the unemployment rate held steady at 4.3%, in line with consensus forecasts.The gold market has struggled for most of the week, as prices have been unable to hold gains above $4,500. The precious metal dropped sharply in its initial reaction to the better-than-expected labor market data. Spot gold last traded at $4,441.03 an ounce, down 0.77% on the day.

(Kitco News) – The global gold supply will see modest growth in both mine production and recycling in 2026, even as gold demand is projected to decline as double-digit losses in jewelry and central bank purchases are offset by increased investor appetite for bars and coins, which will replace jewelry as the largest component of demand for the first time, while the annual average gold price is forecast to surge by 43% to a new record high of $4,920, according to the latest analysis and projections from Metals Focus.In their annual Gold Focus 2026, the independent precious metals research consultancy provided detailed forecasts for gold supply, demand and price in 2026, as well as comprehensive historical supply and demand data for 2025."Gold rallied strongly in 2025, by 44%, its best performance since 1980,” said Matthew Piggott, Director of Gold and Silver at Metals Focus. “Although net central bank purchases were roughly a fifth lower than the year before following three consecutive years of 1,000 tonnes plus gold demand, the 2025 figure remained significantly above pre-2022 levels, with the official sector continuing to play a strategic role in the gold market. A further shift by consumers away from jewellery, in favour of bars and coins, also contributed to last year's dynamic, with China (+28%) and India (+17%) leading the gains. For the first time in our series, physical investment is set to replace jewellery as the largest component of gold demand.”Piggott acknowledged that gold’s decline following the early year rally – and the range-bound price action that followed – have disappointed many investors, while high oil prices have impacted several key bar and coin markets. “That said, the drivers from 2025 remain intact: ongoing US policy uncertainty, persistent concerns about the dollar's long-term outlook, elevated geopolitical risks, and stretched equity valuations,” he said. “Together, these factors reinforce gold's role as a safe haven and portfolio diversifier, and we expect further all-time records to be achieved later this year.”In their detailed analysis, Metals Focus analysts noted that global gold mine production reached another high in 2025, rising 2.0% year-on-year to 3,817 tonnes, driven by new mines, expansions, and higher artisanal and small-scale gold mining. “Global all-in sustaining costs rose by 12% y/y to $1,552/oz, underpinned by higher royalties and inflationary cost pressures,” they wrote. “In 2026, gold mine supply is forecast to increase again, by 2.4% y/y to 3,907t, as output strengthens in all regions except for Oceania and Europe.”Meanwhile, despite gold prices setting record highs, global recycling rose by just 2.8% year-over-year in 2025, though it was enough to set a 13-year high of 1,404 tonnes. “This performance was driven by gains in Europe, as well as modest increases in most other regions, all of which offset notable weakness in South Asia,” the report said. “Scrap supply is forecast to rise by 5.1% y/y in 2026, as low near market stocks and the desire to retain gold as a safe haven limit gains despite sharply higher prices.”Central bank demand cooled somewhat compared to recent years, with net official sector purchases falling by 22% year-over-year to a four-year low of 848 tonnes. “Buying was spread geographically, as elevated US policy uncertainty encouraged further diversification,” the analysts said. “Sales were concentrated among a small number of countries, largely reflecting portfolio rebalancing after the price rally. Despite headwinds from the energy shock, net purchases are expected to remain historically high in 2026 as diversification-led drivers persist.”On the investment front, exchange-traded product (ETP) holdings increased by 803 tonnes in 2025 – the highest annual inflows since 2020 – with gains spread across regions. “Tariff uncertainty, rising US debt, concerns over Federal Reserve independence, and ongoing geopolitical turmoil all enhanced gold’s investment appeal,” they noted. “Physical investment rose 16% to a 12-year high, as strong price gains fuelled retail demand.”On the industrial side, Metals Focus said electronics demand was essentially unchanged in 2025, gains from the burgeoning AI buildout offset by weakening demand for consumer electronics. “Decorative and Other Industrial fabrication contracted by 4.9% in 2025, to its lowest level since a pandemic-affected 2020,” the analysts added.And global jewelry fabrication declined by 19% in 2025 to a five-year low of 1,646 tonnes. “Most countries saw losses, as high prices dominated the trend, prompting light-weighting, carat shifts and some substitution from gold to platinum and plated or gold-filled jewellery,” they wrote. “In 2026, the decline is expected to continue, by a further 11%, leaving fabrication only slightly above a pandemic-impacted 2020.”And while 2026 started on a positive note with a series of fresh all-time highs, the near-unprecedented momentum didn’t last. “Changing expectations on US policy rates and the fact that the market had become overbought fuelled a correction soon after,” the report noted. “The war in Iran has also added pressure to the gold price, as concerns about inflation have further reduced the scope for US rate cuts and boosted sovereign yields and steepened curves.”“In spite of these headwinds, we are confident that, once the Iran war dust settles, gold will resume its bull run,” the analysts wrote. “This is premised on our expectation that the worst will be avoided and that, on balance, policymakers will tolerate elevated inflation, rather than sacrifice growth.”“Crucially, all other factors that underpinned gold last year are likely to remain in place over the rest of 2026 and beyond.”

(Kitco News) - The broader market's conviction that artificial intelligence will usher in a deflationary era of productivity is blinding investors to an immediate, capital-intensive infrastructure scramble that is actively draining global resource supplies, according to Azuria Capital Founder and CEO Tavi Costa.In an interview with Kitco News, Costa warned that the physical infrastructure required to support the AI boom - from massive data centers to a revamped electrical grid - is colliding with a mining sector operating at historic supply deficits..embed-container { position: relative; padding-bottom: 56.25%; height: 0; overflow: hidden; max-width: 100%; } .embed-container iframe, .embed-container object, .embed-container embed { position: absolute; top: 0; left: 0; width: 100%; height: 100%; }"The buildup for AI to be deflationary is actually very inflationary, and that buildup is where we are," Costa said. "Once all that is built, we're going to be in a very deflationary world, and I do not want to own hard assets in that environment. We're just not ready for that yet."Costa argues this overlooked demand shock is occurring exactly as primary mine supply stagnates. While he noted that copper has entered a volatile "price-discovery phase," he stressed that investors are overlooking other critical bottlenecks."Zinc prices need to be adjusted much higher," Costa said, pointing out that new zinc supply remains stalled at 2012 levels.He framed the broader picture starkly: "We can't build mines in two years or three years. These things, it's a view on 15 years from now. We're seeing the rebirth of mining in a large way."The Sovereign Debt Trap and an 'Emerging Markets Moment'This physical supply crunch is unfolding against a backdrop of severe sovereign debt stress. Costa warned that the U.S. Treasury market is currently behaving erratically, effectively handcuffing the Federal Reserve's ability to maintain hawkish policy over the long term."We're getting close to an emerging-markets moment in the Treasury market," Costa said. "We're playing with fire in the U.S. in a huge way."He pushed back directly on the market's growing expectation that newly confirmed Fed Chair Kevin Warsh will raise rates in response to accelerating inflation. Warsh, sworn in on May 22, used his opening note this week to pledge fidelity to "the best of the Fed's traditions," according to Reuters, while Cleveland Fed President Beth Hammack publicly suggested the central bank may need to tighten further.Costa called the hike narrative a misread."Maybe we'll see one rate hike, and I'm wrong here, but I really don't think that should be any investor's base-case scenario," he said. His base case: "We're probably going to see further cuts, not only the short end but also the long end eventually, because the system cannot survive if we see this."The constraint, in his view, is the math of debt service. "Interest payments to GDP are getting to a level that is well above any other country in the world today, particularly developed economies that are more comparable to the U.S.," Costa said. He expects Washington to eventually reach for tools last used in the 1940s, including yield-curve control. Gold's quiet displacement of TreasuriesThe sovereign-level rotation Costa has been forecasting is now visible in the data. According to the European Central Bank's annual report on the international role of the euro, gold now accounts for roughly 27% of total global official reserve assets, surpassing U.S. Treasuries at 22% - a shift the ECB attributed largely to gold's price appreciation rather than net new buying. The World Gold Council reported that central banks added 863 metric tons to official reserves in 2025, with Poland, Kazakhstan, Brazil, China and Türkiye among the largest buyers.On Wednesday, Reuters reported that the Reserve Bank of India publicly denied a Bloomberg Economics analysis suggesting it had sold roughly $12 billion in gold reserves in the two weeks ended May 22, saying its physical stock remains unchanged at 880.52 tonnes.Costa said the cost of suppressing rates to service national debt will ultimately be paid through currency debasement.Populism, M&A, and the Latin American roadmapAs inflation and wealth inequality reach levels Costa compared to the 1930s, he warned of rising political risks, pointing to recent comments by Sen. Bernie Sanders proposing significant government equity stakes in AI companies."Equity positions live on forever," Costa said, cautioning mining executives chasing government capital that political leadership will eventually change. "The gap of valuation between emerging markets and the rule-of-law economy is starting to be in check here."Faced with these supply realities and mounting jurisdictional risks, major mining companies are prioritizing corporate consolidation over greenfield development. Costa, who holds a position in Orla Mining, addressed the recently announced $18.5 billion all-share merger between Equinox Gold and Orla, which would create a roughly 1.1-million-ounce North American gold producer.The deal was announced just weeks before Orla halted operations on June 1 at its Camino Rojo mine in Mexico's Zacatecas state due to what the company described in a statement as an illegal worker blockade tied to profit-sharing disputes."I still own Orla," Costa said. "But it is one of the situations where the fundamental story could be changing here. It just goes to show how Mexico is a difficult jurisdiction."On the merger itself, he was constructive: "The Equinox and Orla combination - it makes a ton of sense. It's not necessarily a synergy-type merger, but it is a sort of re-rating thesis where you get to a million ounces production a year."Costa, who is Brazilian, has flagged Latin America as a defining investment opportunity for the next decade. With Reuters reporting that Barrick Mining is weighing a London listing to spin off its African business and refocus on North America, Costa said the structural case for Latin America has strengthened despite recent share-price pullbacks."Latin America does carry its own risks," he said. "But I think there's some inherent floor of safety in those markets just given the fact that we are in a crunch for supply." He pointed to Argentina under President Javier Milei as the regional "roadmap" for attracting capital - with reforms on inflation, currency stability and openness to foreign investment being studied by neighbors including Bolivia and Chile.Nationalization, Costa argued, "would be a very difficult endeavor to pursue in today's markets" given the strategic value sovereigns now place on critical-mineral access.Silver's supply mathThe structural argument extends across the precious-metals complex. According to the World Silver Survey 2026, published by the Silver Institute and Metals Focus, the silver market is projected to record a supply deficit of approximately 46.3 million ounces this year - the sixth consecutive annual shortfall. About 70% of silver is mined as a byproduct of other metals, meaning higher silver prices do not directly trigger new primary mine development.Costa expects that imbalance to resolve through a violent upside repricing rather than industrial demand destruction. "Repricing would probably be on the upside given the supply constraints," he said.'Early to mid innings'So how should capital allocators accurately price jurisdictional risk into their models today? How does a professional investor survive the 60% to 70% drawdowns that are notorious in the mining sector? And what is the exact macroeconomic trigger that would force Costa to immediately liquidate his hard-asset portfolio?Watch Kitco’s full interview with Tavi Costa for the complete macro playbook, including Costa's specific evaluation framework for mid-tier miners and why he believes the commodity supercycle is still in its "early to mid innings."