A recent World Bank report points to a growing gap between the outlook for gold producers and the rest of the mining industry.
While base metal prices are expected to fall sharply over the next 18 months, gold prices are projected to remain at record highs, leaving gold miners plenty of room for expansion and book balancing.
According to its latest commodity market outlook, the World Bank expects gold prices to rise by 36% this year to an average of $3,250/oz, before softening slightly to $3,200/oz in 2026.
The sustained high price will allow JSE-listed miners to continue investing in new growth opportunities, with the latest trading statements published by Gold Fields, AngloGold Ashanti and Harmony Gold all reflecting healthier balance sheets.
For Gold Fields, this will be “another year of relatively high capex”, with the group planning to invest $282m in its Canadian Windfall project and $110m in its St Ives renewable power project, plus $940m in sustaining capital.
AngloGold Ashanti plans to spend $1.62m-$1.77m to extend the lives of its mines and accommodate the addition of Egypt’s largest gold mine, which drove a 28% rise in gold production in the first quarter.
Harmony Gold will also remain in a period of high capex, with R10.8bn set aside for this financial year as the group continues to reinvest back into its business, including on extension projects at Moab Khotsong and Mponeng mines.
“The record gold prices have provided an excellent opportunity to replace maturing hedges with new ones as they expire, locking in excellent margins in-line with our hedging policy,” said Harmony CEO Beyers Nel in the miner’s latest trading update.
Gold’s recent price surge has been driven by strong safe-haven demand stemming from policy uncertainty and mounting trade tensions, which drove a surge in central bank buying last year.
“The sharp ascent of gold prices — once again breaking records this year — offers a market-based barometer of the extent to which geopolitical concerns remain highly salient to investors,” reads the World Bank report.
This safe-haven demand is expected to persist in the near term, with the price forecast rising even higher if policy uncertainty does not start to abate by next year.
However, the same factors which present an upside risk to gold’s forecast — namely, geopolitical tension and trade disruptions — are expected to weigh on base metal prices over the next year or so.
Amid escalating trade tension, the broader metal demand outlook has deteriorated sharply, said the World Bank, whose metals and minerals price index is projected to fall 10% this year and a further 3% in 2026.
Recent tariff hikes on metal-intensive products, including cars and consumer electronics, are expected to curb metal consumption and dampen the demand for base metals.
Added to this is subdued growth in major economies and the growth of electric vehicles, with the prices of aluminium, nickel, zinc and lead all expected to edge down over the next 18 months.
Copper prices are also expected to slip by 10% year on year in 2025 and lose another 2% next year, reflecting weaker demand growth and steadily rising supply, with increased output expected from Africa, East Asia, Russia and South America.
In line with the weaker outlook, BHP CEO Mike Henry recently warned that acquisition opportunities are becoming slim in the global copper sector, less than a year after the copper giant’s failed bid to buy out rival Anglo American.
Weakness in China’s property sector also continues to weigh on the demand for construction-related metals, together with weak industrial activity in major economies this year.
With rising iron ore output expected from Australia and Brazil, the world’s two largest producers, iron ore prices are forecast to decline by 13% this year and another 7% in 2026.
Under the World Bank’s forecast, iron ore prices will weaken at a time when Kumba Iron Ore, Africa’s largest iron producer, struggles to replace its mineral resources and ore reserves.
The company warned in its latest annual report that “there may be a potential challenge regarding general affordability and the availability of capital over the next three years”.
“A failure to grow our reserves or develop new operations to maintain our current levels of production will undermine our ability to generate long-term value,” said the group.
With gold prices set to continue outshining the broader metals index, the uneven playing field has seen JSE-listed gold miners far outperforming their mining industry peers this year.
AngloGold and Harmony have seen their share prices gain 78% from the start of the year, while DRDGold is up 60% and Gold Fields 55%.
Sibanye-Stillwater has also increased 49%, benefiting from both record gold prices and stronger platinum group metal prices in the first quarter.
In contrast, Anglo American Platinum has gained less than 10% since end-December, with Impala and Northam Platinum up by about 35% and 30%, respectively.
Among base metal producers, Kumba has given up nearly 6% since the start of the year while Glencore and South32 are down by about 25% and 15%, respectively.
Anglo American, which now focuses purely on premium iron ore, copper and crop nutrients, is down more than 10% year to date.
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