Recycling is the fastest-moving part of supply and normally the most predictable: raise the price, get the metal. This cycle the elasticity has been visibly weaker.
Two plausible explanations
Either households expect further gains and are holding, or the metal that would ordinarily be sold has already been sold in previous cycles and the stock available at the margin is genuinely smaller.
Why it matters for the balance
Supply models that assume a reliable scrap response will understate tightness if that response keeps arriving late and small.
Household gold as a savings instrument, not just an ornament
In several of the markets where recycling has traditionally supplied the largest volumes, gold jewellery functions as much as a store of value and a form of collateral as it does as an adornment, which changes the calculus around selling it. A household holding gold as a savings buffer against future need has a genuinely different reservation price than one holding it purely for consumption, and that reservation price tends to rise, not fall, when confidence in the asset's future purchasing power increases. The slower scrap response this cycle is consistent with more holders viewing their gold this way rather than as inventory to be liquidated opportunistically at a high price.
Pawn and gold-loan markets offer an alternative outlet for a household that needs cash without wanting to permanently part with the metal, and growth in that channel in several markets appears to have absorbed some of the liquidity need that might previously have shown up as outright scrap sales.
What a genuine supply shock would look like
If elasticity in recycled supply really has fallen structurally rather than temporarily, the practical implication is that the market's shock absorber for a sudden demand surge, whether from official-sector buying, an investment scare or a jewellery boom, is smaller than historical models assume. That would tend to make future price spikes sharper and more prolonged than the same size of demand shock would have produced a decade ago, since mine supply cannot respond quickly and the traditional secondary buffer, scrap, is responding more slowly than usual.
It is too early to be certain the change is structural rather than cyclical, but the balance of evidence so far argues for taking the weaker scrap response seriously in any forward-looking supply model, rather than treating it as noise.
