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Mining industry

Gold's Bull Run Continues, But Sentiment May be Overheating

Strategic Insights

— 1 min read

As gold hits new record highs and investors pile in, UBS warns that sentiment has become "excessively" bullish in the short term. Despite this, the bank believes the fundamental drivers for gold remain intact, and the next six to twelve months are likely to favor the bulls. The macro backdrop, including a strengthening US dollar, falling inflation, improving growth, and easing investor anxiety, is not indicative of a bear market. Central banks are also expected to continue buying gold as part of a broader trend towards diversification away from the dollar.

Key Takeaways:

  • Gold has surged about 60% in the past year, setting roughly 40 new record highs.
  • Investors have been piling in not just into bullion, but also into silver, platinum, and gold miners.
  • UBS warns that sentiment towards gold has become "excessively" bullish in the short term.
  • The bank believes the fundamental drivers for gold remain in place, and the next six to twelve months are likely to favor the bulls.
  • The macro backdrop, including a strengthening US dollar, falling inflation, improving growth, and easing investor anxiety, is not indicative of a bear market.
  • Central banks are expected to continue buying gold as part of a broader trend towards diversification away from the dollar.
  • Gold miners have had a golden year, with the GDX index of producers more than doubling in 2025.
  • Valuations on earnings and cash flow for gold miners are roughly in line with 2019 levels, while free cash flow yields are higher and most balance sheets are now net cash.
  • UBS believes risk and reward remain favourable for gold miners, with most companies showing improved reliability, stronger free cash flow, and rising dividends.
  • The bank has nudged up its valuation multiples and target prices across the board, lifting its price targets by 3-20% while keeping its positive stance on the sector.
  • Barrick Gold, Endeavour Mining PLC, Newmont, Kinross, and Franco-Nevada are highlighted as turnaround stories or beneficiaries of improving returns and operational recovery.

Statistics:

  • Gold has surged about 60% in the past year.
  • The GDX index of gold producers has more than doubled in 2025, outperforming the metal itself by around 70%.
  • Valuations on earnings and cash flow for gold miners are roughly in line with 2019 levels.
  • Free cash flow yields are higher for gold miners.
  • The US dollar has strengthened, inflation has fallen, growth has improved, and investor anxiety has eased.

Sources:

  • UBS
  • Bloomberg

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