Commodities: Gold
The commitment of traders (COT) report last week showed us that the bullish speculative conviction in gold stalled, at least near term, with the bulls and bears adding almost exactly equal positions. While the gross net long position could still see selling emerge into strength but the near-flat week-on-week change in net positioning suggests to us the market is at an inflection point.
Precious metals have struggled of late with the Fed forecast to hike interest rates 1-2 times before Christmas, remember, the market was looking for cuts before the Iran war. However, with gold now trading ~27% below its 2026 high the risk/reward looks good as rate fears diminish and crude oil retreats.
FireFly is an emerging copper-gold company focused on advancing the high-grade Green Bay Copper-Gold Project in Newfoundland, Canada – its dual listed also trading in Canada. Formerly known as Auteco Minerals, it rebranded to FireFly Metals in November 2023, a well-timed move looking at the stock’s subsequent appreciation.
Kingsgate is a legitimate gold producer with the recently strong gold price tailwind, upgraded guidance, and a forward P/E that looks cheap relative to peers, all helping the $1.6bn stock gain promotion to the ASX200. The key risks are Thai jurisdictional exposure (it’s been burned before), cost management, and the Chile project timeline. Revenue is estimated to be $631mn in FY26, and the stock is already starting to pay a small dividend.
Minerals 260 is a $2,2bn WA-focused gold developer whose flagship Bullabulling project near Kalgoorlie positions it as a potential future mid-tier gold producer, with significant exploration and development upside. The Bullabulling project is one of Australia’s largest undeveloped gold deposits, hosting 4.5Moz and offering a clear pathway to production. Confidence in the project received a major boost earlier this year when royalty giant Franco-Nevada committed $220m in funding, helping propel MI6 into the ASX 200 in June.
Precious metals have struggled to regain their mojo as rising global inflation has already seen the ECB hike rates and now the Fed is expected to follow suit. Gold doesn’t pay interest, meaning the higher interest rates go, the less attractive it becomes, contributing to its recent weakness as central banks pivot to a more hawkish stance. We like the risk/reward at current levels but there are no signs of a swing low at this stage.
After feeling the markets wrath last week, gold and its related stocks surged higher on Monday following the news of a deal. By the ASX close, gold had surged more than US$100/oz, sparking a powerful rally across the sector, with 10 ASX200 gold stocks jumping more than 10%. When the recent Iran war broke out, gold was trading above US$5,000, and while it might not get back there in a hurry, the weaker oil prices become, the stronger its recovery is likely to be.
