Jefferies is positive about the prospects for gold mining companies through 2026, expecting favorable conditions in the gold market to continue, while producers benefit from expanding margins, limited cost inflation and growing free cash flow, according to a December 2025 report.

The brokerage company noted that the factors that supported gold prices in 2025 remain in 2026. These include de-dollarization, the fiscal situation in the United States, macroeconomic uncertainty, gold purchases by central banks, demand for physical gold ETFs, and demand related to gold-backed Tether.

Jefferies also mentioned geopolitical uncertainty and stock market volatility as additional factors that could affect gold.

On this basis, the company forecasts gold prices at $4,200/oz in 2026, compared to $3,418/oz in 2025, while maintaining a long-term gold price assumption of $3,000/oz.

Jefferies noted that the prospects for gold miners are strengthened by the gap between rising gold prices and relatively slow growth in operating costs. Gold prices have been rising significantly faster than the total cost of maintaining production (AISC), which has led to margin expansion year-on-year.

The data in the report shows that the average free cash flow margin per ounce for gold mining companies covered by Jefferies will continue to expand through 2026, reflecting higher profitability at prevailing price levels.

According to the brokerage, cost pressures are present, but remain subdued. Jefferies noted that cost inflation in gold mining as a whole remained below 10%. Higher royalties are already evident, and the company has noted increasing pressure from labor and supplies costs.

At the same time, lower oil prices have been identified as a tailwind that helps offset some of these increases. Jefferies said that this balance sheet contributes to the expansion rather than erosion of margins for gold producers.

The margin background is expected to contribute to higher free cash flow generation in 2026. Jefferies expects both higher free cash flow per ounce and higher aggregate free cash flow across its gold mining operations.

The graphs in the report show the growth of the free cash flow margin in both dollars per ounce and percentage terms, with total free cash flow reaching multi-year highs for the sector.

Jefferies also noted the capital discipline among gold miners in 2025. Manufacturers have mainly focused on organic growth and shareholder returns, rather than large mergers and acquisitions.