Gold mining stocks have fallen since the start of the Iran war. Which ones are worth buying?

Since the beginning of the military conflict in the Middle East, gold, contrary to the classic "safe haven" logic, has been getting cheaper. But the shares of individual gold mining companies have fallen even more sharply. Freedom Finance Global analyst Vladimir Chernov has written about which securities it makes sense for investors to pay attention to during the downturn.

At its peak on January 29, a month before the start of the military conflict in the Middle East, the gold price approached about $5.6k. After the start of the conflict, it retreated to the range of $4.1k - 4.2k. The decline was about 25% from the peak and 18-22% since the start of the war in Iran. (By April 8, the gold price had corrected but is still about 14% below its January record).

At the same time, sectoral indices of gold miners fell by 16-18% on average during the same time, while individual shares in the indices fell by 25-30%. This shows that the main pressure was not on the whole market evenly, but on the most cost and debt-sensitive companies.

To understand why this happened, we need to understand the nature of the gold mining business. For the market it is important not only how much gold costs, but also how much the company earns from each ounce after taking into account the full cost of mining.

And now the quotes are being pressured by costs. The industry faces rising energy, logistics and debt service costs in 2025-2026. High interest rates have added pressure, as the sector has traditionally had a significant debt burden. Logistics costs for companies are rising due to disruptions in maritime transportation due to the crisis in the Red Sea and risks around the Strait of Hormuz. Ships bypassing the Suez Canal via the Cape of Good Hope has increased voyage distances, freight and fuel costs. Tensions around Iran led to higher transportation costs and insurance premiums, as well as risks of delays.

For example, in 2025, IAMGold's AISC (all-in costs per ounce) will be $1.9 thousand per ounce, while in 2024 it will be $1.72 thousand per ounce. According to the World Gold Council, the average AISC in the industry in the third quarter of 2025 increased by 9% in annual terms - to $1.61 thousand per ounce.

Of course, quotations are also affected by the fall in the value of gold itself - the margins of companies are shrinking faster than the price of metal is falling. But for gold miners, this lever works both ways. When gold becomes more expensive, companies' profits and cash flow often grow faster, because a significant part of their costs are conditionally fixed or grow slower than the realized price.

The key reason for the fall in the price of gold since the beginning of the war in Iran is the change in the structure of demand for protective assets. At the first stage of the conflict, investors were buying this metal, but then there was a reversal. The growth of yields on U.S. Treasury bonds and the preservation of tight monetary policy of the Federal Reserve System - the U.S. central bank did not reduce the rate on March 18 - made dollar instruments more attractive. Real yields (adjusted for inflation) have turned positive, which historically puts pressure on the price of gold. Yields on 10-year USTs held above 4.5%, which reduced interest in gold.

The second factor is profit taking and capital flows into the energy sector. Since the beginning of the conflict and before the announcement of a two-week truce between the U.S. and Iran, the cost of the benchmark grade of oil Brent rose by more than 50%, on April 7 in the morning the price of Brent futures rose above $111 per barrel. In such conditions, institutional investors reallocated funds to the oil and gas sector, which directly benefits from rising energy prices. As a result, gold came under pressure not only from rates, but also from alternative "protective" assets with current yields.

The third factor is a strong dollar. In periods of geopolitical uncertainty, the strengthening of the dollar increases pressure on gold, as the metal is denominated in the U.S. currency. The DXY index at one point rose above 100 points, which additionally limited the growth of gold quotations.

The current correction looks more like a technical and medium-term correction than a fundamental change of trend. Geopolitical tensions persist, which means that demand for protective assets is not completely disappearing.

At the same time, central banks continue to increase gold reserves. According to the World Gold Council, in 2024 net purchases by central banks will exceed 1 thousand tons, in 2025 - 863 tons.

For the investor, this means that the current drawdown in gold mining stocks can form a favorable entry point, but only if we are talking about an investment of at least 6-12 months.

Among global public companies, gold mining leaders Newmont and Barrick Mining are worth paying attention to.

They have relatively low production costs (around $1.3k - 1.5k per ounce) and stable cash flow. During the current correction, their forecasted P/Es fell to 10-12, which is below historical levels. Newmont now has a P/E of 14.86, while Barrick's is 10.6.

Newmont shares have lost about 12% since the beginning of the war in Iran. At the same time, since the beginning of the year they have added 14.8% (by the closing on April 7), and over the year - by almost 156%. The S&P 500 has lost 3.34% since the beginning of the year.

Now the average target price of Newmont securities is $139.82, which means the potential upside is still more than 20%.

On April 23, the company will report first-quarter 2026 earnings. According to Wall Street analysts, it will show a sharp rise in EPS ($2.02, plus 61.6% year-over-year), the Zacks analysts' consensus forecast calls for the company to report net sales of $6.53 billion, up 30.38% from a year earlier.

Shares of Barrick Mining have lost 6.5% since the beginning of the year and 18.5% since the beginning of the war in Iran. The average target price for the company's securities is $57.03, which implies a possible growth of almost 38%. Over the year they have already added almost 135% in price.

For the last two consecutive quarters in 2025, the company has reported gold sales growth of 9% and 15%, respectively. Increased sales volumes will be key to sustaining revenue and margins in the coming quarters. Particularly as metal prices decline.

As a whole the market is now in the phase of revaluation. In the base scenario on the horizon of 6-12 months gold can return to the range of $4.5 th. - 5 th. per ounce as yields stabilize and the dollar weakens.

In a more cautious scenario quotations will remain in the corridor of $4 th. - 4.5 th. At the same time shares of gold miners are able to recover faster than the metal itself due to the operating leverage. It makes the sector interesting for gradual purchase of shares at current levels. But at the same time the investor should not forget about high volatility of securities and influence of macro factors.

Does not constitute an investment recommendation.

This article was AI-translated and verified by a human editor