Gold Holds Firm as Junior Miners Regain Momentum
16 July 2025
Flight to Safety Drives Gold to New Highs
Investors once again sought shelter in gold during turbulent times. On 13 June, gold prices climbed to a new all-time high, $3,432.34 per ounce1, driven by escalating geopolitical tensions following Israeli strikes on Iranian nuclear sites.
As tensions around the conflict eased and U.S. trade negotiations evolved throughout the month, equity markets rebounded, supported by strong corporate earnings that bolstered investor confidence. The S&P 500 closed at record highs on 30 June2. While gold was pressured by this shift in sentiment, it remained resilient, closing at $3,303.14 per ounce on 30 June, a modest monthly gain of $13.89 per ounce (0.42%). As of 30 June, gold is up 85.93% over the past five years3. Investors should keep in mind that past performance is not a reliable indicator of future results, and that investment in gold is subject to risks, including volatility and the risk of investing in natural resources.
Gold Stocks Outperform Despite Flat Metal Prices
Gold mining equities, as represented by the NYSE Arca Gold Miners Index (GDMNTR), once again managed to post a gain (up 3.03% in June)4, despite gold’s flat performance and the broader equities’ strong recovery. In both 2023 and 2024, whenever gold prices drifted sideways without much momentum, gold equities tended to experience sharp declines (see charts below). This downturn also corresponded with declining investor interest in gold, as evidenced by outflows out of the gold bullion ETFs5.
Source: Bloomberg. Past performance is no guarantee of future results. All series are shown in USD. Returns are price returns only (dividends excluded). Each line is rebased to zero at 8 March 2023. No currency hedging or leverage assumptions are applied. Investing is subject to risk, including the possible loss of principal. Index performance is not representative of strategy performance. It is not possible to invest in an index.
Source: Bloomberg. Past performance is no guarantee of future results. All series are shown in USD. Returns are price returns only (dividends excluded). Each line is rebased to zero at 1 March 2024. No currency hedging or leverage assumptions are applied. Investing is subject to risk, including the possible loss of principal. Index performance is not representative of strategy performance. It is not possible to invest in an index.
It is encouraging to see gold equities outperforming the metal since mid-April, despite relatively flat gold prices over the same period.
Source: Bloomberg. Past performance is no guarantee of future results. All series are shown in USD. Returns are price returns only (dividends excluded). Each line is rebased to zero at 17 April 2025. No currency hedging or leverage assumptions are applied. Investing is subject to risk, including the possible loss of principal. Index performance is not representative of strategy performance. It is not possible to invest in an index.
Why Gold Equities Are Gaining Momentum
Gold equities’ outperformance makes sense to us. Gold companies are realizing record margins at current gold prices – they don’t require higher gold prices to continue to deliver strong free cash flow, and with average all-in sustaining costs for the sector at around $1,600 per ounce, they can in fact stay profitable at a gold price much lower than the spot price today.
We believe another factor providing support for gold equities this year is western investment demand once again acting as an important driver of gold prices—unlike in 2023 and 2024 when central bank demand acted as the main driver. Central banks and Asian investors don’t typically buy gold equities, but western investors do; their return to the gold markets should continue to support a re-rating of the gold mining sector.
Despite their strong performance so far this year, gold equities are still trading at historically low valuations. Scotiabank estimates that for their universe of senior gold producers, current stock prices, on average, reflect a 30% discount to spot gold prices6. Thus, continued outperformance of gold stocks relative to the metal, even in a flat gold price environment, is justified in our view. Meanwhile, the small-cap or junior gold mining companies, which have lagged gold and the larger companies in recent years, appear to be staging a comeback.
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1 World Gold Council. (30.06.2025)
2 Bloomberg data. (30.06.2025)
3 World Gold Council. (30.06.2025)
4 FT. (30.06.2025)
5 World Gold Council. (30.06.2025)
6 Scotiabank, “Gold Monthly Statistics – July 2025”.
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