Gold SWOT: BMO: Conditions Appear Favorable for a Broader Gold Equity Rally in 2025

Strengths

• The best performing precious metal for the week was platinum, up 0.15%. India’s trade deficit expanded to a record high in November, as the nation’s import bill ballooned, particularly due to a rise in gold shipments. The gap between exports and imports stood at $37.8 billion in November, trade ministry data showed, much higher than the $23 billion deficit forecast by economists in a Bloomberg survey. The trade deficit in October stood at $27.1 billion.
• Torex Gold reports that Mexico’s Director General of Mines under the Federal Ministry of Economy has lifted the temporary suspension notice and allowed for all activities within the Morelos Complex to resume, including open pit and underground mining, processing operations and all activities associated with the Media Luna Project, according to Scotia.
• According to CIBC, Dundee Precious Metals has announced the results of its pre-feasibility study (PFS) for the Čoka Rakita project in Serbia. The company aims to complete a feasibility study by the end of 2025, with first gold concentrate production expected in the second half of 2028. Assuming a gold price of $1,900 per ounce, the project’s net present value (NPV) and internal rate of return (IRR) have risen to $735 million and 41%, respectively. This marks an increase from the $588 million NPV and 33% IRR based on a $1,700 per ounce assumption outlined in the preliminary economic assessment (PEA) filed earlier this year.

Weaknesses

• The worst performing precious metal for the week was palladium, down 3.52%. Gold slipped along with most commodities and equity markets, as traders face a rush of interest-rate decisions by major central banks, including the Federal Reserve. Bullion traded near $2,640 an ounce, after notching a modest gain in the previous session as investors parsed mixed U.S. data, according to Bloomberg.
• Barrick reports a substantial deterioration of its operating conditions in Mali, following its ongoing dispute related to government requests for an increased share of mine economics. This includes blocked gold shipments and prior-reported employee arrests in the media. Barrick notes that it may be required to suspend operations if gold shipments remain blocked, according to RBC.
• The metal’s landscape and risk assets saw a rebound following a sharp sell-off in after the Federal Open Market Committee’s (FOMC) December interest rate decision. Causing the move was the change in the dot plot where the median dot is now at 3.75%-4%, suggesting only an additional 50 basis points of easing throughout 2025, according to CIBC. 

Opportunities

• Franco Nevada announced that its subsidiary has entered a $500 million precious metals stream (gold, platinum, palladium, and rhodium; 70% gold and 30% PGM) agreement with Sibanye-Stillwater. The agreement covers specific production from SSW’s Marikana, Rustenburg and Kroondal mining operations in South Africa's Bushveld Complex and provides immediate cash flow, according to Scotia.
• With spot gold hovering near record highs around $2,700 per ounce, conditions appear favorable for a broader gold equity rally in 2025. BMO expects investors to remain selective in the first half of the year, waiting for more clarity on cost management and capital allocation strategies. Overall, BMO favors stable, low-cost producers, undervalued companies approaching free cash flow (FCF) growth, and developers with substantial resource inventories.
• Gold is likely to set a record high of $2,900 an ounce next year on strong investments into bullion, robust physical buying, and higher purchases by central banks, according to ANZ Banking Group. That would be about 9% higher than current levels.

Threats

• Several news outlets reported this week on a proposed mining tax in Bulgaria targeting “underground resources.” The latest proposals suggest this tax could be implemented as a one-time payment next year. According to Scotia, Dundee Precious Metals could face negative impacts from this higher tax, as nearly two-thirds of its asset net asset value (NAV) and all of its estimated 2025 production come from Bulgaria.
• Raymond James has updated their forecasts for 4Q prices. They expect 2024 gold production to be near the bottom end of Centerra’s guidance of 370,000-410,000 ounces. They expect 2024 all-in-sustaining cost (AISC) on a by-product basis to be near the lower end of guidance of $1075-$1175 per ounce.
• According to BMO, while the Čoka Rakita project helps alleviate some concerns about Dundee Precious Metals' production growth, a decline in production is still anticipated between 2026 and 2028.

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