Jefferies is constructive on the outlook for gold miners as the sector moves into 2026, citing favourable gold-market dynamics alongside expanding margins, manageable cost pressures and rising free cash flow, according to its December 2025 sector review.
The brokerage said the key forces that underpinned gold prices through 2025 are expected to remain in place next year. These include ongoing de-dollarisation trends, concerns around the U.S. fiscal position, broader macroeconomic uncertainty, sustained central bank gold purchases, physical gold ETF inflows and demand linked to Tether-backed gold products. Jefferies also highlighted geopolitical risks and equity market volatility as additional supportive factors.
Against this backdrop, Jefferies forecasts an average gold price of $4,200 per ounce in 2026, up from $3,418 per ounce in 2025, while maintaining a longer-term price assumption of $3,000 per ounce.
The firm noted that gold producers are particularly well positioned because gold prices have risen far faster than operating costs. In recent years, price gains have significantly outpaced growth in all-in sustaining costs (AISC), leading to a steady widening of margins. Jefferies’ analysis shows free cash flow margins per ounce across its gold mining coverage continuing to improve through 2026, reflecting stronger profitability at current price levels.
While cost inflation remains a factor, Jefferies said pressures have so far been contained, generally staying below 10% across the industry. Higher royalty costs are already evident, and the firm pointed to emerging pressure from labour and consumables. However, lower oil prices were identified as a meaningful offset, helping to support margin expansion rather than erosion.
This margin environment is expected to translate into stronger cash generation next year. Jefferies anticipates both higher free cash flow per ounce and increased aggregate free cash flow across its coverage universe in 2026, with sector-wide free cash flow projected to reach multi-year highs.
Finally, the brokerage highlighted improved capital discipline among gold miners in 2025, with companies largely prioritising organic growth and shareholder returns over large-scale mergers and acquisitions.