The combination of gold, a global favourite driven by the never-ending antics of U.S. President Donald Trump, and the re-awakening of critical and technology metals has provided investors with fresh opportunities, if the upward trend continues.
The effect of gold rising by US$90 an ounce to US$3370/oz lifted most producers of the metal with the rise reflected in a 5% increase in the ASX gold index.
Overall, the Australian market traded in positive territory for most of the week with the all ordinaries index up by close to 2% and broad metals and index up by 1%.
Close observers of the gold sector will be pleased with the latest price rise but also concerned that the metal has essentially been trading sideways since April, which is the first point of concern because of the struggle to move higher after a stellar upward run.
There is also the currency effect which is dragging down the earnings of Australian goldminers on conversion with the A-dollar gold price flatlining at around A$5200/oz thanks to the local currency rising from US59c to US65c over the past four months.
A rising A-dollar, which is as much about a falling U.S. dollar, is one cautionary development for gold-focused investors. Rising costs are another, as are widespread downgrades of production forecasts.
Leading investment bank UBS noted what it called “surprisingly disappointing” reports from gold producers in recent weeks which had lowered their forward free cash flow estimates despite sustained strength in the gold price.
“Having set their 2025 budgets at a gold price of between A$2800/oz and A$3000/oz, and spot gold seemingly well established at around A$5200/oz we had been excited about the prospect of a free cash flow harvest in 2026,” UBS said.
“However, the sector has been overwhelmed by a wave of downgrades to those expectations with a combination of reduced or delayed production, higher all-in sustaining costs, and significantly higher capital expenditure and exploration costs – or in the case of Northern Star, all three.”
The bank’s criticism of Northern Star, Australia’s biggest locally-based gold producer, flowed into a neutral investment view of the stock and share price target of $16.65, below last sales at $17.13.
Not everyone agreed with UBS. Argonaut Securities deputy chairman, Liam Twigger, said during the Diggers conference that gold stocks were still very cheap from an historical perspective.
“I think investors don’t believe this price is going to hang around but if it does there is going to be another re-rate (upgrade) of the gold sector,” he said.
Global banking leader Citi agrees with Twigger, refreshing its gold price forecast of US$3300/oz-to-US$3600/oz over the next three months.
Max Layton, head of Citi commodities research told clients that U.S. growth and tariff-related concerns were set to remain elevated during the current half year which, alongside a weaker U.S. dollar, was set to drive gold “to new all-time highs.”
Other gold news and price moves this week included:
- Greatland Resources clawing back 17c to $5.32 after a bruising month since listing at $6.60 on the ASX with disappointing guidance sparking calls for an inquiry into over over-promising and under-delivering.
- Kingsgate Consolidated rising by 57c to $2.72 after reporting the production of 8700 ounces of gold in July, the best month since mining restarted in March at its Chatree mine in Thailand.
- Benz Mining adding 14c to 80c after reporting a 154 metre intercept at 1.1 grams of gold a tonne from a depth of 76m at its Glenburgh project in the north of WA, and
- Medallion Metals rising by 5c to 28c after confirming the acquisition of the Forrestania nickel processing plant from IGO to treat ore from its Ravensthorpe gold project in WA.
The sale of Forrestania continued IGO’s retreat into lithium as its dominant commodity, a move which has seen the stock sold heavily, until this week when it rose by 25c to $4.66, an early winner from the possible lithium revival.
Other lithium stocks to benefit from the improving outlook for the metal included Pilbara Minerals which rose by 13c to $1.74 and Liontown which gained 7c to 85c before suspending trading to launch a $266 million capital raise at 73c a share to “fortify” the company’s balance sheet.
Morningstar, a research house, sided with Pilbara as a better lithium investment than IGO which was removed from a best ideas list to be replaced by Pilbara which is said to be trading at a 40% discount.
Rare earth stocks rose sharply thanks to a suggestion that the Australian Government might replicate the U.S. policy of setting a floor price for a basket of neodymium and praseodymium (NdPr) the most widely traded form of the material which is selling for US$65 a kilo in China versus the US$110/kg on offer from the U.S. Government.
Australian Resources Minister Madelaine King talked up local rare earth opportunities when visiting the Diggers conference, promising government assistance if required while acknowledging that some rare earth projects were difficult to launch.
“The government has to step up and take on a responsibility to lead on critical minerals and rare earths,” she said.
Lynas was the big rare earth winner from King’s proposal, rising by $1.64 to $12.13. RareX added 0.4c to 2.2c, Arafura was up 0.5c to 18c, while Hastings slipped 1c lower to 28c.
Iluka, better known as a titanium minerals producer, rose by 80c to $5.80 after signing a deal to process rare earth ore mined by Lindian Resources in Africa. Lindian was up 3c at 13c.
Copper stocks firmed after a warning from China of an ore shortage and the problem of ever-deeper mines in leading copper producing countries such as Chile was driven home by a collapse in the Teniente mine which killed six workers.
Capstone was the pick of the copper sector during the week with a rise of 88c to $9.63 and could continue rising if Morgans is right with its buy tip and price target of $12.10.
Sandfire was the best of the local copper stocks with a rise to 63c to $11.32, while Firefly was the best of the exploreres with a gain of 3c to $1.07. 29Metals could only manage a 1c gain to 29c.
Other notables moves this week included:
- WA1 Resources, up $2.43 to $17.75 after announcing the production of niobium oxide from testwork on ore extracted at its Luni project in WA.
- Fortescue, up $1.59 to $18.36 thanks to the iron ore price remaining above US$100 a tonne and as the company withdrew further from its wasteful green energy plans.
- Trigg Minerals, up 1c to 9.6c after announcing an investment in a U.S. tungsten project. At one stage this week Trigg traded at 12c, earnings a speeding inquiry from the ASX, and
- Larvotto Resources, up 2c top 76c thanks to growing interest in its Hillgrove antimony project in NSW.
