Any doubt whether gold was in a bull market has vanished, with the gold price hitting yet another record high in mid-October when it surpassed $4,200 an ounce for the first time, and the favourable market conditions pushing gold past LNG as Australia’s second-highest value export.
The gold price exceeded $5,000 an ounce (US$3,000 an ounce) for the first time in early April, following an ongoing and unprecedented years-long rally since the price crossed US$2,000 for the first time in 2020.
In January, the World Gold Council (WGC) projected that gold would continue to bolster Australian portfolios in 2025. This forecast was evidenced throughout the year by ongoing political tensions, a weak US dollar, and record monthly inflows into exchange-traded funds, which consistently drove gold prices to all-time highs.
The WGC’s September report said gold ended the month up 12 per cent at US$3,825 an ounce, marking a 47 per cent year-on-year increase, the highest return in a calendar year since 1979.
The WGC said: “The only drag came from some rebalancing and profit-taking – captured in a gold price lag in the model and reflected in the intraday price dip on 30 September, which was quickly bought.”
While noting that gold remains a strong long-term diversifier and a reliable short-term hedge against equity drawdowns, the council cautioned that, since gold is not a contractual hedge, strong performance during equity corrections is not guaranteed.
It also cautioned that gold might not respond as robustly to an equity sell-off due to its current “overbought” status.
The WGC said: “There is probably some merit to this – from a tactical perspective, gold might struggle to find marginal investment buyers in this scenario, even as long-run strategic positioning remains light.”
Australia’s gold export earnings rose 42 per cent to $47 billion in the financial year 2025 and are forecast to grow a further 28 per cent to $60 billion in the financial year 2026, before stabilising at $59 billion in 2027.
Gold output is projected to rise from 240 tonnes in 2025-26 to 369 tonnes in the following period.
As a result, gold is expected to overtake LNG to become Australia’s second-highest value export in the financial year 2026, according to the September 2025 Resources and Energy Quarterly.
The report said: “The main driver of upward revisions in export values in 2025-26 has been the extraordinary surge in US dollar gold prices.
“The renewed strength in gold prices comes as US interest rate cuts occur – which lowers the opportunity cost of holding gold – and worries rise over the US fiscal outlook and the rate of US inflation.”
Australian gold miners were already benefiting from market conditions favourable to profitability. Key indicators of the developing bull market included an increase in mergers and acquisitions (M&A), a rapidly rising gold price, and a significant drop in oil prices, which have fallen by more than 37 per cent since 2022.
A subsequent weakening of the Australian dollar has further boosted the market advantage for Australian gold producers.
M&A expenditure in Australia typically does not exceed around US$3 billion per year; however, in 2023, it surged to over US$30 billion and maintained strong momentum into 2024.
Recent deals include Westgold Resources’ acquisition of Karora Resources for over $1.2 billion, Red 5’s merger with Silver Lake Resources to create the $2.2 billion Vault Minerals, and De Grey Mining’s approval of a $5 billion takeover bid from Northern Star Resources.
The surge in M&A activity follows what has been described as the largest gold merger in history: Newmont’s acquisition of Newcrest in 2023 for $26 billion.
Central banks have also been buying gold at the fastest pace in more than half a century, buying more than 1,000 tonnes of bullion in 2022 and 2023 and another 694 tonnes in the first nine months of 2024.
The WGC has reported that more than three-quarters of all central banks expected gold holdings to keep increasing into the foreseeable future, with some (China and Russia in particular) having the strategic aim of removing the US dollar as the world’s reserve currency.
In 2023, China purchased more bullion than any other country, with its official gold stockpiles exceeding 2,200 tonnes. It is also believed that China significantly underreports its gold reserves.
Russia’s stockpiles exceed 2,300 tonnes, making it the fifth-largest gold holder in the world, while India, Brazil and South Africa hold about 1,000 tonnes combined.
In comparison, Canada does not hold any gold reserves, while Australia has only 80 tonnes.
Tania Constable, Chief Executive Officer of the Minerals Council of Australia, said the unprecedented surge in the gold market was driven by record global prices and expanding mine output, which have combined to deliver a renewed period of strength for Australia’s gold industry.
Constable said: “The strength of Australia’s gold industry underscores the vital contribution mining makes to the nation’s prosperity.
“Higher export earnings will flow directly to governments through increased royalty and company tax payments, helping to fund hospitals, schools, infrastructure and the essential services Australians rely on.”
Constable noted that high prices were also reviving exploration and investment, particularly for gold and copper-gold projects, reinforcing Australia’s position as a trusted and competitive global supplier.
She added: “But this surge cannot be taken for granted – stable and enabling policy settings together with streamlined regulations are necessary to attract investment, lower costs, ensure Australia fully capitalises on any upswing in the commodity cycle, and safeguard the economy when prices fall.
“When policy is predictable and investment conditions are strong, the mining industry can turn global opportunity into local jobs, community development and long-term economic growth.
“Gold will remain a cornerstone of Australia’s economic resilience, supporting national income, regional economies and investment well beyond the current price cycle.”
