Gold will rise again, says Macquarie. Buy the dip in ASX gold stocks Newmont, Genesis Minerals, Vault, and Perseus
The gold price, and as a result ASX gold stocks, have dipped after the US election result. It’s a buying opportunity, suggests Macquarie.
The ASX gold sector has been in pullback mode since early November, after what was up until that point a stellar 2024. What changed? Trump + Red Sweep. This refers to the outcome of the recent US elections where the Republican Party gained control of the US Presidency and of both chambers of US Congress.
This was far from the most highly anticipated outcome, and unluckily for the gold price and ASX-listed gold stocks – it is widely accepted by market analysts to be the most bearish for gold. You can read about why in an article I wrote shortly after the US election about this exact topic.
Whatever the reasons, history shows that the gold price, and the prices of most ASX gold stocks, have indeed dipped. But this is a buying opportunity, suggests major Australian broking and research house Macquarie.
The broker’s Commodities Strategy team has reviewed the major drivers for the gold price in 2025, and its Equities Research team has run these new forecasts through their stock valuation models. This means several updates to their ratings and target prices for Macquarie’s ASX gold sector coverage.
Let’s investigate the key takeaways from each of Macquarie’s research teams.
What will the gold price do in 2025?
The Macquarie Commodities Strategy team anticipates a complex interplay of factors will shape the gold price through 2025. Nuances include:
1. Trump Bump
The team expects initial headwinds from a strong U.S. dollar to weigh on gold as the Trump + Red Sweep US election result works its way through markets (the US election results are widely considered bullish for US economic growth, and this tends to support demand for the US dollar).
2. Strong physical & Central bank demand
Any near-term weakness is likely to be counterbalanced by steady physical demand for gold (that is from its industrial and jewellery-based applications), as well as strong demand from central banks.
On central bank buying, this is part of a broad trend playing out in markets over the last few years as central banks look to reduce their exposure to the US dollar in favour of other major global currencies and hard assets like gold.
Such “de-dollarisation” trends are being driven by fears over the existing US fiscal deterioration, but also that it might take a significant turn for the worse under the influence of, trade, tax, and spending policies tied to the upcoming Trump administration.
3. Lower global interest rates = Looser financial conditions
Macquarie’s house view is the Federal Reserve is likely to continue to ease US interest rates toward 4% through 2025. Gold does not have a yield, rather it incurs expensive storage and insurance costs. This means there is an opportunity cost associated with owning gold. The higher / lower risk-free benchmark interest rates, the higher / lower the opportunity cost of owning gold.
Lower official interest rates usually lead to looser financial conditions, which typically stokes asset price inflation, and gold is widely seen as a hedge against inflation.
4. Uptick in Chinese investor activity
Chinese investors have been snapping up gold since the local property market has taken a nose-dive (and Chinese stocks haven’t been much better).
Under such scenarios, gold prices could rally sharply to challenge $3,000/oz, especially if systematic momentum buying is triggered by any break above recent highs.
5. Structural shifts
Macquarie highlights a structural shift in gold's responsiveness to real interest rates. Despite the dollar's strength and higher real rates, gold prices have held strong, a departure from historical patterns. Given the latest rally has occurred without falling real interest rates, it suggests other factors at play. The broker doesn’t expect further structural shifts to impact gold in any meaningful way, and to be supportive if traditional relationships reassert themselves.
Macquarie Commodities Strategy team gold targets
As a result of the above factors, Macquarie Commodities Strategy team has applied what it describes as “moderate” upgrades to its gold price projections. Key highlights include:
2024
A 2% annual increase in gold prices, with a 6% surge expected in Q4, leading to an average price of $2,385/oz.
2025-2026
A projected peak average gold price of $2,800/oz in Q2 2025, revised up by $200/oz, followed by prices settling at $2,650/oz in 2025 and $2,350/oz in 2026.
2027-2028
Gradual stabilisation, with prices hovering around $2,200-$2,250/oz.
In summary, the Macquarie Commodities Strategy team’s views converge on the theme of resilience in gold prices, buoyed by a supportive macroeconomic backdrop and strategic investor behaviour. While pressures from a strong dollar and high real interest rates remain in the near term, the potential for renewed fiscal concerns or geopolitical shocks creates a favourable environment for the gold price in the medium-to-longer term.
Should you buy the dip in ASX gold stocks?
The latest analysis from the Macquarie Equities Research team highlights a favourable outlook for ASX-listed gold stocks, driven by the abovementioned improved gold price forecasts and substantial forecast earnings per share (“EPS”) upgrades, particularly among higher-cost and hedge-free producers. Here's a breakdown of the team's views across large-cap, mid-cap, and smaller-cap stocks, along with a focus on their top African producer.
Large Capitalisation Stocks
Among the major ASX-listed gold producers – Newmont (NEM), Northern Star Resources (NST), and Evolution Mining (EVN) – NEM emerges as the standout performer.
Newmont (ASX: NEM)
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- Rating: OUTPERFORM | Target Price: $86⬆️ vs $82
- NEM receives the most significant bump up in forecast EPS growth, averaging 16% over the next five years, thanks to its minimal gold hedging.
- Recent asset sales at a premium bolster NEM's net asset value (“NAV”), with potential buyback opportunities providing further upside.
- Minimal guidance risk and robust financial positioning make NEM Macquarie's top pick among large-cap gold stocks.
Northern Star Resources (ASX: NST)
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- Rating: Restricted | Target Price: Restricted
- NST's average forecast EPS improvement is 10% from FY25-FY29, but this is tempered by its relatively high hedging position (18% of next five years' production).
- The Macquarie Equities Research team is restricted on NST, but acknowledges its resilience despite the hedging position.
Evolution Mining (ASX: EVN)
%20price%20chart.png)
- Rating: NEUTRAL | Target Price: $5.20⬆️ vs $4.60
- EVN also averages 10% EPS growth, aided by its copper exposure (30% of revenue), which provides commodity diversification.
- However, EVN is the least preferred among the three due to its low free cash flow (“FCF”) yield (3%) and heavily leveraged balance sheet.
Mid-Capitalisation Stocks
Macquarie highlights Genesis Minerals (GMD) as a standout in the mid-cap space.
Genesis Minerals (ASX: GMD)
%20price%20chart.png)
Rating: OUTPERFORM | Target Price: $3.10⬆️ vs $2.70
- GMD has upgraded its FY25 guidance, driven by an early restart of Laverton operations, indicating strong growth potential.
- Tower Hill remains a pivotal factor, with approval timing posing either a key opportunity or a risk.
- GMD’s strong management team and robust 10-year outlook further enhance its appeal.
Smaller-Capitalisation Stocks
The smaller-cap gold producers see notable EPS and target price upgrades, particularly among higher-cost, hedge-free operators.
Vault Resources (ASX: VAU)
%20price%20chart.png)
- Rating: OUTPERFORM | Target Price: $0.57⬆️ vs $0.50
- VAU is Macquarie’s top pick among smaller producers, with 25% average EPS growth over five years driven by its high-cost structure and leverage to rising gold prices.
- Despite a soft FY25 guidance, VAU is poised for strong FCF growth, with FCF yield expected to increase from 7% in FY25 to 13% by FY26 as stripping costs ease.
Ramelius Resources (ASX: RMS)
%20price%20chart.png)
Rating: OUTPERFORM⬆️ vs NEUTRAL | Target Price: $2.70⬆️ vs $2.50
Upgraded from Neutral to OUTPERFORM following share price weakness, RMS benefits from improved consensus expectations for its Rebecca feasibility study, reducing AISC risk.
Other Notable Smaller-Caps
%20price%20chart.png)
- SBM Rating: OUTPERFORM | Target Price: $0.54⬆️ vs $0.49
- GOR Rating: Restricted | Target Price: Restricted
- RRL Rating: OUTPERFORM | Target Price: $3.30⬆️ vs $3.00
- RSG Rating: OUTPERFORM | Target Price: $0.60⬆️ vs $0.57
- WAF Rating: OUTPERFORM | Target Price: $2.20⬆️ vs $2.10
- WGX Rating: OUTPERFORM | Target Price: $3.90⬆️ vs $3.50
St Barbara (ASX: SBM) gets an 8% target uplift to $0.53 from $0.49 due to its “relatively high cost base and subsequent EPS leverage”.
Gold Road (ASX: GOR), Resolute Mining (ASX: RSG),and West African Resources (ASX: WAF) each received an average forecast EPS upgrade of 10% over the next 5 years.
Regis Resources (ASX: RRL) and Westgold Resources (ASX: WGX) each enjoy one of the largest increases to forecast EPS (18% average over the next 5 years). Macquarie likes the fact both both miners currently have zero fixed hedging, leaving them completely exposed to the rising gold price.
Top West-African Producer
Among West African gold producers, Perseus Mining (PRU) stands out as Macquarie’s top pick.
Perseus Mining (ASX: PRU)
%20price%20chart.png)
- Rating: OUTPERFORM | Target Price: $3.70⬆️ vs $3.40
- PRU boasts a 13% FCF yield in FY25, supported by its Nyanzaga development in Tanzania and its track record of disciplined execution.
- PRU offers a diversified geographic footprint, operating in Côte d’Ivoire, Ghana, Tanzania, and Sudan, compared to peers with more concentrated exposure.
Conclusion
Macquarie’s improved gold price outlook translates to meaningful earnings upgrades across its coverage of ASX-listed gold stocks, with the most substantial benefits accruing to higher-cost, unhedged producers. NEM leads the large-cap category, GMD dominates mid-caps with its growth outlook, and VAU emerges as the standout in smaller caps, but RRL and WGX both deserve a special mention. For African-focused producers, PRU shines with its cash generation and diversification.
This article first appeared on Market Index on Tuesday 10 December 2024.
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Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl has a passion for technical analysis and has taught his unique brand of price-action trend following to thousands of Aussie investors.
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Investing is risky. Inevitably you will endure losses. If you can't cope with losing, don't invest.
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Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl...
Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl...
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