Gold’s surge to record highs in 2025 is reigniting investor confidence in the mining sector, reversing months of outflows and fueling fresh optimism in gold-mining stocks. The price of gold has breached US$3,000 per ounce, climbing over 15% this year, prompting investors to reassess the profitability of gold-mining companies as their results improve with higher gold prices.
After enduring cost pressures from inflation-driven increases in labor and fuel costs, along with regulatory challenges, gold miners are now benefiting from significantly improved profit margins. This has led to a notable reversal in investment trends, with funds dedicated to gold mining companies seeing a dramatic influx of capital.
Key Highlights
Investor Inflows: According to Reuters, gold mining funds are set to record their largest monthly net inflows in over a year in March 2025, totaling US$555.3 million, the highest since November 2023. This marks a stark contrast to 2024 when these funds faced US$4.6 billion in net outflows, the largest in a decade.
Gold vs. Gold Derivatives Funds: While physical gold and gold derivatives funds saw US$17.8 billion in net inflows in 2024, investors are now showing increasing faith in gold mining stocks, evidenced by their rising share prices.
Gold Mining Stock Performance
Newmont (TSX: NGT, NYSE: NEM) and Barrick Gold (TSX: ABX, NYSE: GOLD) have seen impressive rebounds in 2025, surging by approximately 27% and 21.5% respectively, after enduring losses in 2024.
Barrick recently announced a US$1 billion share buyback program after reporting strong earnings and doubling its free cash flow in Q4.
AngloGold Ashanti (NYSE: AU, JSE: ANG) declared its strongest balance sheet in over a decade and issued a 2024 dividend of US$0.91 per share, nearly five times higher than the previous year.
Gold Fields (NYSE: GFI, JSE: GFI) and Harmony Gold (NYSE: HMY, JSE: HAR) are also considering share buybacks and expansion projects.
Driving Factors Behind Gold’s Price Surge
Central Bank Demand: Central banks have continued to be significant buyers of gold, purchasing over 1,000 metric tons of gold in 2024, marking the third consecutive year of strong buying. Countries like China, India, Kazakhstan, Uzbekistan, and Poland have been key players, motivated by geopolitical risks and efforts to reduce reliance on the U.S. dollar.
Geopolitical Uncertainty: The freezing of Russia’s US$300 billion in foreign reserves after the invasion of Ukraine in 2022 highlighted the risks of holding assets in foreign currencies, further fueling central bank demand for gold.
US Federal Reserve Rate Cuts: Investor sentiment has been influenced by economic instability, global trade tensions, and expectations of rate cuts by the U.S. Federal Reserve, all of which make gold an attractive safe-haven asset.
Exchange-Traded Funds (ETFs): According to the World Gold Council, global gold ETFs saw US$9.4 billion in inflows in February 2025, the highest monthly intake since March 2022.
How High Could Gold Prices Go?
Gold prices have remained resilient above US$3,010 as of March 25, 2025. With the US$3,000 level serving as strong psychological support, demand for gold as a safe-haven asset is expected to remain strong. Investment firm UBS has raised its gold price forecast to US$3,200 over the next four quarters, driven by ongoing geopolitical risks and a potential prolonged trade conflict.
Many experts within the gold sector are even forecasting much higher long-term gold prices as global uncertainty persists, signaling continued bullish sentiment for the precious metal.
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