Australian Gold Miners Surge $7 Billion as Conflict Boosts Prices
Australia's leading gold mining companies collectively added approximately $7 billion in market capitalisation on Monday, following US-Israel missile strikes on Iran that have propelled gold prices upward. Investors are flocking to the precious metal as a safe haven asset amid escalating geopolitical tensions in the Middle East.
Gold Prices Hit Record Highs
The price of an ounce of gold rose 2.5 per cent overnight to $US5360 ($7540), nearing the record of $US5485 per ounce set in late January. This surge is part of a broader trend, with gold more than doubling in value since early 2024, driven by significant geopolitical uncertainty and global inflationary pressures.
Simon Kent-Jones, head of private wealth research at Ord Minnett, commented on the market dynamics. "We expect energy producers, gold miners and defence stocks to outperform, while transport-intensive sectors such as airlines, logistics and discretionary retailers face pressure from higher fuel and freight costs," he said.
Kent-Jones added that while the conflict is currently anticipated to be short and contained, the risk of prolonged disruption, particularly to the Strait of Hormuz, could lead to a structural energy and inflation shock with major implications for global growth and policy rates.
Top Miners Break Share Price Records
Australian-based gold miners experienced strong gains, with the top three by market capitalisation—Northern Star Resources, Evolution Mining, and Greatland Resources—adding 4.8 per cent, 6.5 per cent, and 4.6 per cent, respectively. These increases pushed all three companies to new share price records.
The top ten biggest locally-based miners collectively contributed to the $7 billion rise in market value on Monday. Most of Australia's gold production originates from Western Australia, where the industry has been thriving.
Royalty Rate Debate in Western Australia
Despite the booming profits, the Western Australian Government in January ruled out increasing the gold royalty rate from its current 2.5 per cent to 3.75 per cent. This decision comes even as state miners enjoy substantial profit margins.
Historical context shows that in March 2015, with gold at about $1520 per ounce, a review by the Department of Mines and Petroleum recommended raising the royalty rate to 3.75 per cent. Former Treasurer Ben Wyatt attempted to implement this rate in 2017, but fierce industry opposition thwarted the proposal.
Budget papers reveal that the State Government collected $739 million in gold royalties during the 2025 financial year. By not adopting the higher 3.75 per cent rate, it left an estimated $369.4 million in potential revenue on the table.
Based on conservative assumptions of steady production and an average gold price of $5860 per ounce since June 30 last year, Western Australia is projected to forgo approximately $525 million in gold royalty revenue this financial year.
The ongoing conflict in the Middle East continues to influence global markets, with gold miners benefiting from increased investor demand for safe assets. As tensions persist, the economic fallout remains a key focus for analysts and policymakers worldwide.
