Gold market strength boosts equities as UBS sees room for more gains

Gold mining stocks have surged in 2025, outpacing bullion as strong quarterly results and disciplined capital spending help restore investor confidence, UBS said. The GDX index has risen more than 40% year-to-date and outperformed gold by 15% over the past three months, led by Gold Fields (+40%), AngloGold Ashanti (+30%), Newmont (+30%) and Kinross (+25%).

UBS noted first- and second-quarter results were broadly positive, with record free cash flow, stable production and cost guidance despite higher royalties, and a focus on cash returns over aggressive capital spending. Analysts said the sector is “starting to rebuild investor confidence and trust.” Strong balance sheets may support accelerated share buybacks in the second half, while organic growth projects and selective mergers and acquisitions could also gain traction, mainly through regional consolidation.

Although gold miners have re-rated, valuations remain below 2019 levels, with the GDX trading around seven times forward EV/EBITDA and a 35% discount on forward P/E. UBS remains positive but increasingly selective, favoring “cheaper turnaround stories.” Preferred picks include Barrick Gold, Endeavour Mining, Kinross Gold, AngloGold Ashanti and Franco-Nevada, while Agnico Eagle, Wheaton Precious Metals and Fresnillo were downgraded to Neutral.

Markets favor high-potential, turnaround projects

If the UBS view plays out and markets see sustained strength in gold equities, healthy balance sheets, and selective M&A, North American-listed juniors could benefit from improved market sentiment, better access to funding, and potential takeovers. The key will be proving asset quality and fiscal discipline to tap into that renewed investor confidence.

Sustained outperformance of gold equities may draw more capital into higher-beta junior miners, which historically benefit later in the cycle once confidence in major producers is restored.

With capital flows are becoming more selective, favoring cheaper turnaround stories rather than expensive outperformers, juniors with low valuations, clear production growth potential or strong exploration catalysts, and disciplined spending plans are likely to attract institutional interest.

UBS also highlighted potential M&A tailwinds, with exploration-stage and small-scale producers in North America’s established gold belts, such as Abitibi, Nevada, and Yukon, potentially becoming targets for consolidation and strategic acquisitions.

As well, stronger free cash flow and buybacks from majors are improving sentiment across the sector, which could make equity raises less dilutive for juniors with credible development plans. UBS cautioned that cost pressures remain, particularly from labour and fuel, and said juniors demonstrating cost discipline and realistic capital expenditure guidance will stand out in the current market environment.

Who stands to benefit?

• Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF): Endeavour is a leading gold producer in West Africa with operations and development projects across Senegal, Côte d’Ivoire, and Burkina Faso. A rising gold price could boost revenues, free cash flow, and project economics, supporting further exploration and expansion in the region.
• Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF): Thor Explorations develops and operates gold projects in Nigeria, Senegal, and Burkina Faso, including the Segilola and Douta Gold Projects. Higher gold prices could improve project profitability and make future exploration and development more financially attractive.
• US Gold Corp (NASDAQ:USAU): US Gold is a junior gold developer in Wyoming advancing the CK Gold Project, now preparing for feasibility, financing, and development. Positive gold market conditions could enhance project economics, attract investment, and accelerate development timelines.
• North Bay Resources Inc. (OTC:NBRI): North Bay Resources owns the Bishop Gold Mill in California and mineral rights in British Columbia, focusing on staged exploration and monetization of gold and other minerals. Stronger gold prices could increase the value of its high-grade ore and processing facilities, supporting acquisitions and exploration activity.
• Arizona Gold & Silver Inc (TSX-V:AZS, OTCQB:AZASF): Arizona Gold & Silver holds high-grade gold and silver exploration projects in Arizona and Nevada, including Carlin-type and breccia-hosted targets. A bullish gold environment could improve project valuations and make advancing exploration and development more economically viable.

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