Gold Prices Soar to Historic Highs Amid Rising Costs
Gold prices surged to historic highs in January, reaching $5,595 per ounce, and producers saw huge gains as a result. According to the World Gold Council (WGC), record gold prices outpaced rising mining costs in Q1'26, generating unprecedented margins and cash flows for producers despite persistent inflationary pressures and regional geopolitical disruptions.
The WGC report noted that global average gold producer All-In Sustaining Costs (AISC) rose by 5% quarter-on-quarter and 16% year-on-year to $1,785 per ounce during the first quarter of 2026. The period marked the 28th consecutive year-on-year increase in AISC for the gold mining sector.
The report highlighted that escalating royalty payments served as the primary cost driver for the quarter, with spot gold prices driving revenue expansion and resulting in a surge of 24% quarter-on-quarter and 85% year-on-year in royalty payments. Royalty expenses doubled their share from approximately 6% of AISC in Q1'21 to 12% of the average operation's cost base in Q1'26.
Newmont returned $2.7bn to shareholders after generating its highest ever quarterly free cash flow (FCF) of $3.1bn and has approved an additional $6.0bn share buyback programme, while AngloGold Ashanti also generated record FCF of $1.2bn and moved from a net debt position into net cash.
The WGC noted that costs are expected to rise further due to the Iran conflict and associated supply chain disruptions, which will place additional pressure on margins in Q2'26.