Gold miners’ bull run squeezed as prices plummet and energy costs soar
The miner is looking at Australia’s largest open-pit gold mine, called the Fimiston Open Pit, also known as the Super Pit, in the gold mining town of Kalgoorlie, about 500 kilometers east of Perth.
David Gray | Reuters
Gold prices fell sharply on Monday morning as investors continued to avoid exposure to the precious yellow metal, which is testing its safe-haven status amid the ongoing war in Iran.
The recent decline inevitably had second-order effects on the miners, whose market value also rose as gold prices soared before the war.
Mining companies are among the most volatile stocks and often act as a leveraged bet on the price of gold, with the commodity rising during bull runs and falling further during sell-offs. Since the war, the price of gold has fallen, miners’ incomes have decreased, and the oil and natural gas supply shock has increased energy prices and increased costs.
Before the conflict, they had made notable gains as the price of gold soared to all-time highs, reaching over $5,500 per ounce. The gold spot price is down nearly 25% from its peak in late January and was last trading at $4,250 as of 6:05 a.m. ET on Monday.
VanEck Gold Miners ETF It rose almost 200% in 2025 but has lost some of those gains since then. The fund has lost 27% of its value since the beginning of the year and shows little sign of recovery as the U.S. and Israel’s war against Iran intensifies.
Comparison of the price of the VanEck Gold Miners ETF so far with the spot price of gold in 2026.
The outlook for miners has changed significantly over the past few weeks; Market volatility has squeezed margins at both ends.
“It is interesting to see resource sector reactions to both the energy supply shock and the geopolitical risk event,” said Rob Stein, head of resources research at Macquarie Capital.
“The combination of the two with increased uncertainty potentially leads to change in the level of asset allocation, with the recent rally providing a basis for profit-taking, particularly at the smaller end of the market.”
Russ Mould, investment director at AJ Bell, added that high energy costs were a “real threat” to gold miners’ margins.
“We saw this in 2006-07 when overall production costs rose sharply,” he added.
While gold bullion is a pure commodity play, miners bring additional equity risk that makes them susceptible to an increasingly volatile macroeconomic environment.
“Miners are heavily exposed to economic shocks, which explains why investors are pulling out of this area,” said Michael Field, chief equity strategist at Morningstar.
“Unless risk sentiment improves and confidence in global growth is restored, miners are unlikely to continue their upward path.”
Field added that there are also investors who are taking gains and selling their best-performing assets in recent years to raise cash.
The pullback from gold, traditionally seen as an important safe-haven asset in times of market turmoil, is in line with the ongoing risk-off sentiment in markets as the Iran conflict fuels concerns about inflation and rising energy prices.
The prospect of higher interest rates as a result of the war could boost government bond holdings among investors at the expense of non-yielding precious metals, market strategists recently told CNBC.
