Gold miners are set for further profitability after the price of bullion climbed to record levels due to trade tensions, persistent inflationary pressures and geopolitical volatility which continue to drive demand for the precious metal.
The gold price is 27% higher than it was a year ago and has rallied by 76% over the last five years. Its current spot price of $3,600 (R69.426) an ounce is helping gold producers to sustain marginal operations as higher prices improve profitability.
Paul Hoffman, data analyst at trading education platform BestBrokers, said with the announcement of new tariffs by US President Donald Trump, investors were turning to gold as a hedge against market instability. “Broad-based tariffs have reignited fears of a trade war, despite the announced 90-day pause for imports from most countries he said,” he said.
“As Trump increased the rate regarding Chinese products to 125%, China responded by imposing 84% tariffs on US imports. As a result, traditional safe-haven assets like gold have become the go-to for both individual and institutional investors.”
Hethen Hira, spokesperson of mid-tier gold producer Pan African Resources, said due to the higher price, the company will benefit from fully ramped-up production at its recently commissioned Mogale Tailings Retreatment operations, which will add some 50,000 low-cost ounces to the group’s annual production profile.
He said the group’s recent acquisition of Tennant Mines in Australia was on track to commence production.
The gold price gains mitigate economic losses from higher tariffs and decreased exports, as mining companies are now able to increase production as previously uneconomic orebodies become viable, he said.
“These gains could be much higher if companies are attracted by a favourable and efficient mineral rights regulatory process, which would open up exploration for new mines in our resource-rich country and provide significant upside to the local economy,” Hira added.
Harmony Gold’s Jared Coetzee conceded the gold price had a positive impact on earnings but said the miner generally aimed to meet its production, grade, and cost guidance regardless of the price of bullion. “A higher gold price will of course have a positive impact on earnings, as was evident in our first half of 2025 figures, and we are in a strong position to benefit from the ongoing higher gold prices and improving margins as a result of the higher quality ounces in our portfolio,” he said.
Chantal Marx, head of investment research at FNB Wealth and Investments, said while it was hard to quickly ramp up production in South Africa, she anticipated that mines will focus on improving productivity at existing operations to take advantage of high gold prices. “There may be pressure to use supernormal profits for investments in additional capacity, though this would only impact production in the long term,” she said.
For local gold mines, the earnings outlook is positive in the near term because they’re receiving higher prices for their products, and the cost of mining per ounce is significantly lower than the current gold spot price, driving up profitability, Marx said.
Siphelele Mhlongo, equities analyst at Sanlam Investments, said persistently high gold prices could be here to stay over the short term: “It is important to note that gold benefits from uncertainty as investors gravitate towards real or safe-haven assets like gold, and we are currently experiencing high levels of uncertainty driven by key geopolitical movements.”
Meanwhile, the Minerals Council has warned against calls for South Africa to be withheld from the US. Chief economist Hugo Pienaar said such rhetoric had increased since Trump embarked on a trade war with most of the world.
“In the last week, in response to the Trump tariffs, we have heard some folks coming out with weird suggestions that we should be restricting our platinum group metals export in an attempt to boost beneficiation. We support beneficiation, but we cannot support policies that, in an attempt to boost beneficiation, have the potential to hurt the primary mining sector,” he said.
Minerals & petroleum resources minister Gwede Mantashe first made such a call at the Investing in Africa Mining Indaba in February.
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