Gold rose to a one-week high on Friday as falling oil prices and easing US Treasury yields helped bullion recover from a two-month low.
Spot gold advanced as much as 1.8% to US$4,207 ($6,028) per ounce, its highest level this month, while US gold futures rebounded to around US$4,233 per ounce.
Earlier in the week, the precious metal had fallen to its lowest level in two months as surging oil prices, rising Treasury yields, and a stronger US dollar weighed on investor sentiment.
However, oil prices have retreated after US President Donald Trump pledged not to attack Iran before next month’s midterm elections.
Meanwhile, strong demand at Thursday’s auction of 30-year US government debt helped pull longer-dated Treasury yields down from their highest levels in more than two decades.
Gold’s rebound “appears to be driven largely by some relief in the US Treasury market,” Oversea-Chinese Banking strategist Christopher Wong told Bloomberg.
“The moderation in yields has provided an opportunity for some buying to return.”
Rate concerns remain
Despite Friday’s recovery, gold continues to face pressure from inflation concerns and the prospect of further interest rate increases.
The metal fell 6% in September after the Federal Reserve delivered its first rate hike since 2023, responding to inflationary pressures stemming from the US-Iran war.
Traders expect the Fed to leave borrowing costs unchanged later this month, although further tightening is anticipated over the medium term.
Federal Reserve Bank of St. Louis President Alberto Musalem indicated on Thursday that interest rates may need to rise over the next six to nine months.
Against this backdrop, OCBC’s Wong cautioned against “reading too much into the rebound just yet”.
“It is arguable that a further Fed hike is already priced in but so is the expectation for continued official sector net purchases,” StoneX Head of Market Analysis Rhona O’Connell told Reuters.
“Without any Black Swan event I find it hard to see gold breaking convincingly higher.”
Gold has lost approximately 4.7% so far in 2026, reversing part of its 60% gain last year, as the prolonged Middle East conflict has created an unfavourable macroeconomic environment for the non-yielding metal.
Long-term outlook remains positive
Despite the near-term challenges, industry experts remain optimistic about gold’s longer-term prospects.
That was a key takeaway from the London Bullion Market Association’s (LBMA) annual conference held this week in Sorrento, Italy.
Delegates highlighted gold’s growing importance as central banks diversify their reserves amid geopolitical uncertainty and changes to the global monetary system.
In an LBMA survey, participants forecast an average gold price of US$5,013.30 an ounce over the next 12 months, representing approximately 20% upside from current levels.
Major banks have also maintained bullish forecasts. UBS Group (NYSE:UBS) and Goldman Sachs (NYSE:GS) have both projected gold reaching US$5,400 at some point in 2027.
Meanwhile, weaker prices have provided opportunities for central banks to continue accumulating bullion.
China’s central bank has recorded two consecutive months of substantial gold purchases, while the country’s broader gold imports have also accelerated.
According to Bloomberg, China imported more than 1,000 tonnes of gold through August, already exceeding its total imports for 2025.
A World Gold Council (WGC) survey also found that 89% of central banks expect global official gold holdings to increase over the next 12 months.
Search for new discoveries
On the supply side, gold’s recent weakness has yet to significantly affect mine production.
According to the WGC, global gold mine output between April and June reached its highest level on record for any second quarter.
Exploration spending also remains strong, with S&P Global forecasting that global exploration budgets will reach multi-year highs in 2026.
However, the firm warns that major new gold discoveries remain scarce, with relatively few recent discoveries exceeding the 2-million-ounce threshold.
Much of the industry’s exploration activity has shifted towards existing deposits, mine-site expansions, and lower-risk resource growth rather than grassroots exploration.
S&P Global says this trend could have significant implications for future gold supply, highlighting the importance of greenfield projects in delivering the next generation of major discoveries.
Against this backdrop, several gold miners and explorers are advancing projects across North America.
Luca Mining’s expanding Mexican portfolio
In Mexico, Luca Mining (TSX-V:LUCA) brought its flagship Tahuehueto project in Durango into commercial production last year, following approximately US$30 million in investment to advance the asset through exploration and development.
The milestone followed the successful commissioning of a 1,000-tonne-per-day processing plant supporting the underground operation.
According to Luca, the property covers more than 100km² along a mineralised trend hosting numerous producing and historic mines.
While production continues, the company is advancing exploration to expand its existing resource base of approximately 424,000 ounces of gold.
Luca says it has identified as many as 12 mineralised zones within a structurally controlled epithermal system traced over more than 6km.
During the second quarter of 2026, the company completed approximately 12,400m of drilling, setting a quarterly record.
Luca also operates the Campo Morado polymetallic mine in Guerrero, Mexico, which hosts a larger gold resource than Tahuehueto.
The company recently has also agreed to acquire two additional Mexican projects, including El Barqueño, operated by Agnico Eagle Mines (TSX:AEM), the world’s second-largest gold producer.
To support its expanded portfolio, Luca has also secured a US$75 million investment commitment from Goldgroup Mining (TSX-V:GORO).
Canadian explorers target resource growth
Exploration activity is also increasing across Canada’s established and emerging gold districts.
In Ontario, Signature Resources (TSX-V:SGU) is advancing its 240km² Lingman Lake property package, which it says offers potential for multiple gold discoveries.
The property includes the historic Lingman Lake gold mine, where more than 43,222m of drilling has been completed.
Four historical bulk samples, each weighing approximately 500 pounds, returned an average gold grade of 19 grams per tonne (g/t).
In 2025, Signature established an initial mineral resource comprising 2.1 million tonnes grading 1.38g/t gold for 95,200 ounces in the indicated category. A further 18.4 million tonnes grading 1.14g/t gold, containing approximately 674,320 ounces, were inferred.
The company’s latest drilling program focused on significant step-out targets to test the depth and continuity of mineralisation and guide future exploration.
Signature CEO Dan Denbow says the results “highlighted a large undrilled area that could significantly expand the resource at the Lingman Lake gold deposit”.
The company has also begun a prospecting program targeting an area approximately 15km west of the deposit, where historical exploration activity has been recorded.
Further east, Opawica Explorations (TSX-V:OPW) is focused on the Abitibi gold belt in Québec.
Its Bazooka property lies adjacent to Agnico Eagle’s Wasamac project, which hosts a reported gold resource of approximately 1.77 million ounces.
According to Opawica, historical drilling in the early 2000s identified extensive gold mineralisation at Bazooka, including an intercept grading up to 316.23g/t gold over 1m.
The property sits along the Cadillac Fault Zone, a major geological structure associated with numerous gold deposits.
Opawica also holds the Arrowhead property, surrounded by Agnico landholdings, and the McWatters property, located next to the eastern boundary of Yorbeau Resources‘ (TSX:YRB) historic Astoria project.
Ramp Metals pursues new Saskatchewan discoveries
Another Canadian explorer focused on grassroots discoveries is Ramp Metals (TSX-V:RAMP), which is seeking to identify a new gold district in Saskatchewan.
Its flagship Rottenstone SW property covers approximately 327km².
Following a geophysical survey in 2023, Ramp identified several high-priority targets, including Ranger, Rush, and Rogue, before launching its inaugural drilling program in 2024.
The discovery hole at Ranger intersected multiple gold-bearing zones, including mineralisation grading 73.55g/t gold over 7.5m.
Gold mineralisation was also intersected at the Rogue target, approximately 3km west of Ranger.
At Rush, the company has confirmed volcanogenic massive sulphide (VMS)-style mineralisation extending along a strike length of approximately 250m.
The exploration programs highlight the industry’s continued search for new deposits at a time when major discoveries remain limited, despite expectations for stronger long-term gold demand.
Write to Jackson Chen at Mining.com.au
Main Image: LBMA
