Editor’s Note
This analysis highlights the complex dynamics shaping the gold mining sector in 2024. While high prices and easing costs have created a favorable environment for miners to expand, the same price levels have simultaneously suppressed overall demand from key buyers. This underscores the strategic balancing act companies face in a volatile market.
In 2024, higher-than-usual gold prices incentivized mining companies to diversify their operations and acquire quality resources. Lower inflation translated into a slight reduction in costs, further easing margins for mining companies in a high-price environment.
Total annual demand (excluding over-the-counter transactions) for gold decreased by 3% year-on-year to 3,259 tons in the first nine months of 2024, as high prices dampened momentum in central bank and jewelry purchases. The positive trend in investment demand, characterized by geopolitical uncertainty and interest rate cuts, partially offset the decline in total gold demand.
The adoption of advanced technologies throughout the gold mining value chain will drive cost reduction and improve operational effectiveness. Simultaneously, establishing a sustainable profile will enhance gold’s appeal as an investment option, reinforcing its attractiveness as a safe-haven asset for investors.
Gold dominates budgets as the most explored commodity, with an allocation of 44%, even as the share of battery minerals increases.
The global gold exploration budget is estimated to reach $5.6 billion in 2024, representing a 7% year-on-year decrease but comprising 44% of the total exploration budget. Exploration at mine sites continues to hold the largest share, at 46% of the budget, in line with the average allocation of 42% during 2019-2023, compared to 35% allocated to advanced and feasibility-stage projects, and 19% to early-stage projects. The inclination towards mine-site projects is due to the goal of expanding existing resources amid declining rates of new gold discoveries.
The budget share of junior gold mining companies in 2024 decreased by 13% compared to the average budget of $2.1 billion during 2019-2023, with challenges in securing funds. Meanwhile, the budget share of major gold mining companies increased by 14% compared to the average budget of $2.7 billion during 2019-23.
Regionally, Canada is estimated to record the largest share at 23% within the gold budget in 2024, in line with its strong exploration efforts, followed by Latin America and Australia at 19% and 16%, respectively.
Although the total cash cost of gold decreased by approximately 3% year-on-year in 2024 with declining inflation, costs remain about 33% higher than pre-pandemic costs in 2019. High labor and input costs, along with the strengthening of local currencies against the US dollar, offset the impact of reduced inflation on operating costs.
However, as gold prices increased by 23% year-on-year to $2,386 per ounce in 2024, the high-price environment and gradual cost reduction eased pressure on gold mining companies’ margins and mitigated the need for high-cost mines to temporarily close or reduce production rates.