While President Trump’s trade war has dragged stocks to their worst quarter since 2022, the uncertainty surrounding tariffs has launched gold into a historic rally.
As investors piled into the metal — long considered the ultimate safe haven — spot gold prices crossed the $3,000/oz mark for the first time ever last month.
The yellow metal closed at $3,123.70 on Monday, up 19% year to date. Meanwhile, UBS raised its price target to $3,200/oz.
“With the price now reaching our long-held target of $3,000/oz, the main question is whether the rally will continue,” the bank wrote in a note.
“We think so, as long as policy risks and an intensifying trade conflict continue to spur safe-haven demand.”
UBS has raised the probability of a broad-based, drawn-out trade war to 35%, up from 25%.
“We cannot rule out a drift further towards our risk case — particularly with the Trump administration set to release its trade investigation findings” on Wednesday.
Beyond macroeconomic fears, central banks have also been buying gold at a rapid clip in an effort to diversify away from the U.S. dollar, as Barron’s notes.
Gold miners may be having their breakout moment
Gold mining stocks have lagged the metal itself for much of the past decade.
The VanEck Gold Miners ETF (GDX) returned 10% in 2023 and 10.6% in 2024, while the SPDR Gold Shares ETF — backed by physical gold — rose 12.7% and 26.7% over the same period.
That’s no short-term fluke. UBS notes that miners have “consistently underperformed” both the metal and royalty companies over the past ten years.
But that trend may be turning. The GDX index — a benchmark for gold miners — has outpaced spot gold by 10 percentage points this year, and analysts say there’s more room to run.
“With consensus earnings momentum likely to remain positive, aggregate guidance more realistic and valuations close to cyclical lows, we continue to see attractive risk vs reward in the gold miners,” UBS wrote.
The momentum is showing up in stock performance.
Three of the largest names in GDX — Agnico Eagle Mines (AEM), Franco-Nevada (FNV), and Royal Gold (RGLD) — are up 36.4%, 32.2%, and 24% year to date, respectively.
“Gold miners remain a significantly underappreciated equity opportunity as price returns have barely kept up with earnings upgrades,” wrote Bhawana Chhabra, senior market strategist at Rosenberg Research.
“Underpinned by strong fundamentals and comfortable valuations, this group offers a strong risk-reward profile.”
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