The mechanism
Roughly a quarter of annual gold supply comes from recycling. Unlike mine output, it responds to price within weeks, concentrated in markets with deep household holdings and accessible refining: India, Turkey, Thailand and southern China.
Each sharp rally therefore triggers a supply response that mine schedules cannot provide, which is one reason gold rallies flatten faster than the demand data alone would suggest.
What is different this cycle
Scrap flows have been weaker than the price level implies. Households in the major recycling markets appear to be holding, either expecting further gains or hedging domestic currency weakness.
If that reluctance breaks, the near-term supply response could be substantial. It is the most underweighted risk in most bullish 2026 forecasts.
How to monitor it
Local premia and discounts to the London price in India and China are the highest-frequency indicator available. A persistent discount signals domestic selling into the international market, which is the recycling response arriving.