The on/off war in Iran added to the uncertain mood as threats and counter-threats by both sides to continue fighting clouded the economic outlook.

Doubts about the business case to support massive investment in data centres completed a worrying picture for investors as “circular” deals between chip makers and customers started to look like a giant Ponzi scheme which could suddenly unravel.

The core issue with the artificial intelligence driven data centre boom is that revenue from selling AI services is threatened by the entry of cheap Chinese competition.

The only companies currently making money from the trillions of dollars being spent on data centres are companies supplying raw materials.

Rio Tinto’s record half-year profit of US$6.6 billion from sales of copper, aluminium, and lithium was an example of how data centres are driving demand for industrial metals, offsetting declining demand for its traditional leader, iron ore.

Gold, which has a history of rising at unsettled times like these, did not move far but a 1% rise to US$4084 an ounce boosted investor optimism ahead of next week’s gold heavy Diggers & Dealers mining conference in WA’s mining capital, Kalgoorlie.

A continued recovery in the gold price seems likely with U.S. billionaire and gold enthusiast John Paulson predicting that the price pullback from the record US$5400/oz earlier this year is laying the foundations for a long-term bull market.

Paulson said demand for gold was broadening with central banks continuing to buy and private investors returning after the sell-off.

London-based gold specialist Ross Norman was on the same page this week as Paulson, but with a twist.

Norman said in a note to clients that the “froth” of speculative trading has been blown off the top of gold, creating a more predictable and positive market.

“If you’re a (gold) buyer, you may sleep rather better now than you did when the mob was rampaging,” Norman wrote.

Chinese investors are in no doubt that a gold recovery is underway with China importing 173 tonnes in June, the most in a month since March 2024.

On the Australian market, gold stocks were mixed with an equal number of rises and falls. Moves and news included:

  • Northern Star, up 30c to $20.66 as confidence grows in the successful completion of its Fimiston project upgrade and ahead of a swan song appearance by outgoing chief executive Stuart Tonkin at Diggers on Monday.
  • Greatland Resources, down 16c to $10.23 despite an upbeat performance by chief executive Shaun Day on his June quarter conference call.
  • Santana Minerals, up 3c to 46c after reporting excellent results from the latest drilling at its Bendigo-Ophir project in New Zealand with a best hit of 24.4 metres at 10.9 grams a tonne from a depth of 165.7m. Bell Potter has a target price on the stock of $1.70.
  • Perseus Mining, down 2c at $4.90 after the release of a solid June quarter report which included news that the stock has joined the billion dollar club with its cash balance reaching US$1.03 billion.
  • Capricorn Metals, up 14c at $13.34 after it outlined an expanded production strategy. Macquarie Bank sees Capricorn rising to a target of $16.30.
  • Saturn Metals, up 1c to 42c after raising $100 million to push ahead with its Apollo project in WA, and
  • Genesis Minerals, down 11c at $5.94 but poised for a re-rating as it digests Vault Minerals. UBS sees an uplift from the disposal of small assets with a buy recommendation and price target of $9.50 (down from an earlier tip of $10.15).

Copper news was topped by strong profit reports from major producers Rio Tinto and Glencore as well as local favourite Sandfire which reported record June quarter output, only to see its shares slip 9c lower on the market to $18.74. Morgans has a buy tip on Sandfire with a price target of $22.

Other copper moves included Hot Chili, down 12c at $1.38. Develop, down 83c at $4.71 and Aeris, up 1c at 39c with CG Capital Markets forecasting a future share price of 70c.

Iron ore was in the news for the wrong reason as China ratcheted up its threats to drive down the price of the material, followed by an attack of short sellers.

Fortescue boss Andrew Forrest was annoyed by the Chinese but ignored by the shorters as the price of his company rose by 21c to $19.09, comfortably outperformed by Mineral Resources which rose by $4.43 to $58.73, perhaps on its way to the Morgans target of $68.

Small iron ore stocks were mixed. Killi rose by 1c to 19c. Fenex slipped 2c lower to 26c and Canadian hopeful Iron Bear lost 0.4c to 6.6c.

Lithium stocks firmed marginally. IGO added 8c to $6.83, which is slightly higher than the Morgan Stanley target price of $6.75 but well short of the CG price target of $9.

The rest of the lithium sector was mixed. PLS added 3c to $4.26 after reporting record annual production with Canaccord sticking with a buy tip and target price of $7.

Liontown was sold off after a sluggish June quarter with the stock slipping 17c lower to $1.03. CG stuck with a buy tip but slashed its price target from $2.55 to $1.90.

Other news and market moves this week included:

  • EQ Resources was 1c lower at 26c despite interest in the tungsten producer after a major investment by iron ore billionaire Andrew Forest. CG has a price target on EQ of 50c
  • Uranium stocks eased, widening a gap between the market for the nuclear fuel and equities. Boss lost 10c to $1.20 despite hitting production and cost guidance. Paladin was 90c weaker at $8.79.
  • Maronan Metals lost 1c to 38c, half the 76c price target of Bell Potter which likes the look of its namesake polymetallic project in Queensland, and
  • Heavy Minerals and Pure Resources, two garnet developers, went in different directions. Heavy, which owns the Port Gregory project on the west coast of WA, added 2c to 42. Pure, which owns the Garnet Hills project in WA’s Kimberley region lost 2c to 30c.