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Gold Price Rally Sparks Renewed Interest in Mining Stocks
Mar. 25, 2025 09:30AM PST
Gold's surge to record highs has boosted investor confidence in mining stocks, with sector leaders beginning to break out.
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Gold’s surge to record highs is beginning to reinvigorate investor confidence in companies focused on the yellow metal, reversing months of outflows and fueling fresh optimism in the sector.
With the gold price breaching US$3,000 per ounce and climbing over 15 percent in 2025, investors are reassessing the profitability of gold-mining companies as the metal's higher price is reflected in their results.
After a prolonged period of cost pressures from inflation-driven increases in labor and fuel costs, along with regulatory challenges, gold miners are now benefiting from improved profit margins.
According to Reuters, funds investing in gold miners are set to record their largest monthly net inflows in over a year in March. So far they have seen US$555.3 million in net inflows this month, the highest since November 2023.
Referring to LSEG Lipper data, the news outlet states that this marks a significant turnaround from 2024, when funds investing in gold stocks lost a net US$4.6 billion, the largest amount in a decade.
That's in contrast to physical gold and gold derivatives funds, which saw net inflows of US$17.8 billion in 2024.
Investors' increasing faith in gold stocks is being reflected in their share prices.
Newmont (TSX:NGT,NYSE:NEM) and Barrick Gold (TSX:ABX,NYSE:GOLD), which suffered losses of 10 percent and 7 percent in 2024, have surged by approximately 27 percent and 21.5 percent year-to-date.
Last month, Barrick announced a US$1 billion share buyback program after reporting solid earnings and doubling its free cashflow in the fourth quarter. Similarly, AngloGold Ashanti (NYSE:AU,JSE:ANG) recently declared its strongest balance sheet in over a decade, issuing a 2024 dividend of US$0.91 per share, nearly five times higher than the previous year.
Other gold miners, such as Gold Fields (NYSE:GFI,JSE:GFI) and Harmony Gold (NYSE:HMY,JSE:HAR), are also reportedly considering share buybacks and expansion projects.
What's driving gold's price rally?
One of the key catalysts behind gold’s recent surge is central bank demand.
According to the World Gold Council, central banks purchased over 1,000 metric tons of gold in 2024, the third consecutive year of significant buying and double the average annual purchase of the past decade.
Central banks in China, India, Kazakhstan, Uzbekistan and Poland have continued their aggressive gold acquisitions in 2025, driven by concerns over geopolitical risks and de-dollarization efforts.
The freezing of Russia’s US$300 billion in foreign reserves after its 2022 invasion of Ukraine is widely seen as a catalyst for central bank buying as it underscored the risks of holding assets in foreign currencies or overseas institutions.
With geopolitical uncertainties persisting and potential tariff escalations under the Trump administration, central bank demand is expected to remain strong. Investor behavior has also been influenced by economic instability, global trade tensions and expectations of US Federal Reserve rate cuts.
Statistics from the World Gold Council show that global gold exchange-traded funds saw US$9.4 billion in inflows in February, the highest monthly intake since March 2022.
How high can the gold price rise?
Gold continued to hold above US$3,010 as of Tuesday (March 25), and its resilience at the psychological US$3,000 support level suggests demand for safe-haven assets remains intact.
Instability remains high as investors speculate about US tariffs, which are set to go in effect on April 2.
Investment firm UBS (NYSE:UBS) recently raised its gold price forecast to US$3,200 over the next four quarters, citing persistent geopolitical risks and a prolonged trade conflict.
Within the gold sector, many experts have laid out much higher long-term gold price predictions.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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