VanEck Portfolio Manager Imaru Casanova stated that gold's 25% pullback in the first half of 2026 reflects shifting macro conditions, but persistent inflation, geopolitical risks and lower real interest rates should support gold prices going forward. Gold fell from near $5,600 per ounce in late January to $3,943 at the end of June, while the MarketVector Global Gold Miners Index (MVGDX) declined 15.54% in June and 12.41% year to date, according to Casanova's analysis published by Kitco News. The decline occurred as a stronger U.S. dollar and higher interest rate expectations since the start of the Iran war pressured precious metals. Casanova noted that gold stocks remain one of the best-performing asset classes over the past year despite recent volatility, and current equity prices reflect conservative assumptions compared to prevailing gold prices.
Stronger Dollar and Iran War Impact Drive Gold Price Decline
Casanova said gold prices have been pressured by a stronger U.S. dollar and expectations for higher interest rates since the start of the Iran war. "The dominant macro narrative has become self-reinforcing: higher oil prices keep inflation expectations elevated, elevated inflation expectations keep the Federal Reserve ('Fed') on hold, a Fed on hold keeps real yields elevated, and elevated real yields support the U.S. dollar, weighing on gold," she stated. She added that gold stocks lagged the metal during the period of declining gold prices, as expected.
Fed Rate Environment and Central Bank Demand Support Long-Term Gold Case
Casanova said a prolonged "Fed on hold" environment could contribute to lower or even negative real rates over time, a backdrop that has historically been among the most favorable for gold. According to World Gold Council data covering 44 Fed hikes from March 1997 through July 2023, gold positively surprised on hike days more than 50% of the time, she noted. "Strong, regionally diversified central bank buying and resilient investment demand from Asia continue to underpin gold demand at current levels," Casanova stated. She added that a return of Western investor participation, similar to what happened in 2025, could provide additional support for the gold market.
Gold Miners Report Record Cash Flow with Strong Margins at $4,000 Gold
Casanova wrote that Q1 2026 earnings reflected record cash flow for gold mining companies. "Gold has traded at an average price of approximately $4,700 per ounce so far in 2026," she stated. "With all-in sustaining costs for the sector estimated to average below $2,000 per ounce in 2026, margins remain very strong even at $4,000 gold. This gives companies the ability to finance growth, pay dividends and repurchase shares." She noted that gold stocks have historically outperformed the metal itself in rising gold price environments.
Gold Stocks Trade at Low Valuations Despite Strong Sector Fundamentals
Casanova said gold stocks are currently trading at relatively low valuations by historical measures, even as the sector enjoys strong financial and operational health. "Current equity prices appear to reflect more conservative assumptions than those implied by prevailing gold prices," she stated. She noted that if investors rotate capital away from sectors with much richer valuations, particularly against a backdrop of rising pullback risk, gold stocks could be beneficiaries. Casanova cautioned that gold pays no income and can experience sharp or prolonged price declines, and it may not act as an effective hedge or diversifier in any given period.
FAQ
What caused gold's 25% pullback in the first half of 2026?
According to VanEck's Imaru Casanova, gold fell from near $5,600 per ounce in late January to $3,943 at the end of June due to a stronger U.S. dollar and higher interest rate expectations since the start of the Iran war. The MarketVector Global Gold Miners Index (MVGDX) declined 15.54% in June and 12.41% year to date during this period.
How strong are gold mining companies' margins at current gold prices?
Casanova stated that gold has traded at an average price of approximately $4,700 per ounce in 2026, while all-in sustaining costs for the sector are estimated to average below $2,000 per ounce in 2026. She noted that margins remain very strong even at $4,000 gold, and Q1 2026 earnings reflected record cash flow for the sector.
Why does Casanova believe gold stocks offer upside potential?
Casanova said gold stocks are currently trading at relatively low valuations by historical measures despite strong financial and operational health. She stated that current equity prices appear to reflect more conservative assumptions than those implied by prevailing gold prices, and that gold stocks have historically outperformed the metal itself in rising gold price environments.
