The international spot price of gold officially has surpassed $4,300 per ounce, setting a new all-time high. Since the beginning of this year, the international gold price has increased by more than 60%, outperforming global stock markets and major assets. Investment funds focused on gold and precious metal mining companies have significantly outperformed the gold price this year, with an average return exceeding 100%!
Gold Price Hit Record High
Federal Reserve Chairman Jerome Powell hinted that the Fed may end its balance sheet runoff program in the coming months, indicating that the quantitative tightening cycle could be nearing its end. He also noted a worsening labor market, increasing the likelihood of another rate cut this month. This fueled a surge in gold prices, which broke through the $4,300 per ounce mark. Despite gold having already risen over 60% this year, financial institutions such as Bank of America and Société Générale are unanimously optimistic, expecting gold prices to continue soaring to $5,000 per ounce next year. Analysts from Bank of America and JPMorgan Chase have even boldly predicted that gold could reach $6,000 per ounce by next spring. JPMorgan Chase CEO Jamie Dimon went further, astonishingly stating that if current conditions persist, gold prices could skyrocket to a super high of $10,000 per ounce in the future!
The reason why most foreign investors and financial institutions remain optimistic about the future performance of gold prices is mainly due to central banks around the world accelerating the diversification of their reserves to hedge against the credit risk of the U.S. dollar. This trend is especially notable with significant increases in official reserves by China, Russia, and some Middle Eastern countries. Additionally, the U.S. fiscal deficit and debt risks are difficult to resolve in the short term. Federal Reserve Chair Jerome Powell has hinted at another rate cut in October, and the continued weakening of the dollar has driven a “currency depreciation trade,” pushing market funds into gold. Coupled with escalating global geopolitical conflicts, renewed U.S.-China trade tensions, and ongoing U.S. government shutdowns, risk-averse sentiment has spread. Furthermore, the continuous growth in gold ETF holdings adds to these factors, creating a structural momentum for long-term gold price increases. Together, these elements weave a near-perfect scenario for a major bull market.
Gold ETF and Central Banks Buying
The continuous buying of gold ETFs and global central banks can be said to be the two main drivers behind the recent sharp surge in gold prices. According to statistics from the World Gold Council, global central banks have net purchased gold reserves for 15 consecutive years. Since 2022, the demand for gold purchases by global central banks has been strong, becoming the most important force driving the long-term rise in gold prices during this period. From 2022 to 2024, global central banks have purchased over 1,000 tons of gold each year for three consecutive years, far exceeding the average net purchase of 473 tons from 2010 to 2021. Despite the continuous rise in gold prices, the total gold purchases by global central banks in the first half of this year still reached 415 tons. Although this represents a 21% decrease compared to 525 tons in the first half of 2024, the net inflow in the second quarter was still 41% higher than the quarterly average from 2010 to 2021. JPMorgan estimates that the total net gold purchases by global central banks will still exceed 900 tons for the entire year.
In addition, strong demand from Western investors for gold ETFs has driven a shift in global asset allocation toward gold, spreading from central banks worldwide to the private investment sector. According to the World Gold Council, global gold ETFs saw a net inflow of $17.3 billion in September this year, marking the highest single-month inflow on record and the fourth consecutive month of net inflows. Cumulatively, net inflows into gold ETFs in the first three quarters of this year have reached $26 billion, setting a record for the largest quarterly inflow. Among these, North America and Europe recorded net inflows of $10.6 billion and $4.4 billion, respectively. Global gold ETF holdings increased by 145.6 metric tons in September to 3,837.7 metric tons, reaching the highest level since April 2022. Total holdings grew by 618.8 metric tons in the first three quarters of the year, with the total assets under management of global gold ETFs hitting a record high of $472.5 billion, marking the fourth consecutive month of new highs.
Gold Sector is Outperforming
Gold prices have been hitting new highs repeatedly, and the strongest performing sector globally this year has been the gold mining industry. Gold mining stocks have entered an epic bull market. According to statistics, the S&P Global Gold Miners Index has surged over 130% this year, far surpassing the technology and cryptocurrency sectors. The outstanding performance of gold mining stocks is mainly due to the profit leverage effect brought by rising gold prices. For gold mining companies, production costs are mostly fixed. In other words, with gold prices soaring while costs remain controlled, gold producers can effectively convert gold price gains into net profits, pushing gold miners’ net profit margins to historic highs.
After a long period of dormancy, gold mining stocks have not only significantly improved their financial structures but also delivered impressive earnings reports and very strong cash flows. According to the latest market forecasts, the overall EPS growth rate for gold mining companies in 2025 is expected to nearly double across the board. This has boosted leading gold mining companies such as Newmont Corporation (NEM), Agnico Eagle Mines (AEM), Wheaton Precious Metals (WPM), and Barrick Gold (GOLD), all of which have seen their stock prices more than double so far this year. In comparison, Nvidia’s stock has risen 40%, Oracle 75%, and Bitcoin 31%, making gold mining stocks’ performance even more impressive!
As of the second quarter of this year, major gold miners such as Newmont Mining and Barrick Gold reported an average realized gold price of $3,294 per ounce, representing a year-over-year increase of over 40%. This surge drove the FTSE Gold Mines Index’s EBITDA (earnings before interest, taxes, depreciation, and amortization) to grow by nearly 70%, with net profit margins significantly rising to 50%. Observing the price-to-earnings multiples of gold mining stocks relative to gold prices, they remain at relatively low levels compared to recent years. This indicates that the market’s valuation of gold miners’ earnings potential has not yet been fully reflected. Overall, the price-to-earnings ratios of gold mining stocks are still noticeably below the valuation levels seen at the 2020 gold price peak, suggesting there is room for further stock price appreciation in the future.
Equity Sector Gold and Precious Metal Funds Performance Analysis
International gold prices have surged more than 60% so far this year, potentially marking the best annual performance since the 1970s. Among the domestically registered and saleable fund types, the top performer this year has been the ” Equity Sector Gold and Precious Metals Funds,” which primarily invest in gold mining stocks. According to Lipper statistics, as of October 17 this year, there are currently six registered and saleable gold and precious metals equity funds in the domestic market. Measured in New Taiwan Dollars, these funds have achieved an average return of 128.2% year-to-date, with a three-month average return soaring 65.6%, a six-month average return rising 51.2%, and a one-year average return jumping 94.1%. This makes them the best-performing category among all equity funds.
Table 1: Performance of Equity Sector Gold and Precious Metal RFS in Taiwan
Source：LSEG Lipper, as of 2025/10/17, in TWD
