Gold Miners Shine: M&A and Safe-Haven Demand Fuel Rally

TradingKey - Gold Miner stocks emerged as a bright spot in last Friday’s market session. Barrick Gold (GOLD ) saw its share price rise 7.02%, Newmont Corporation climbed 7.91%, and Coeur Mining (CDE) soared with a 7.83% gain. 

Against the backdrop of intensified geopolitical fractures and accelerating “de-dollarization,” leading gold miners characterized by low-cost production capacity and attractive dividend yields remain core holdings for many institutional investors.

UBS recently indicated potential acquisition interest in both Newmont Corporation and Barrick Gold, triggering heightened expectations of large-scale consolidation among top-tier gold producers. Market participants widely believe that a merger of the two industry giants would generate significant synergies in terms of resource integration and operational scale. This news acted as a key catalyst driving the performance of gold mining stocks last Friday.

If the merger moves forward, the combined company would control approximately 18% of global gold production, with more than 14 million ounces in annual output. It would also own six of the world's top ten largest gold mines, including premier assets such as Cortez in Nevada and Boddington in Australia.

Meanwhile, high dividends continue to provide gold equity investors with stable income. Barrick announced a quarterly dividend increase to $0.1 per share, pushing its annualized yield to 3.11%, significantly above the S&P 500 average of 1.5%, while Newmont launched a $1 billion share repurchase plan.

The weakening of U.S. dollar creditworthiness has also shifted investor risk-off sentiment in favor of gold. With U.S. federal debt now exceeding $35 trillion, and rising protectionist policies threatening global supply chain integrity, confidence in the dollar as a reserve currency is on the decline. In this context, gold—backed by no sovereign credit—is regaining its status as the ultimate safe haven asset, enhancing its long-term appeal.

Amid increasingly cautious sentiment in global markets, the CBOE Volatility Index (VIX) surged above 35 in tandem with the Gold Volatility Index (GVZ), reflecting growing demand for safe havens. The S&P 500 has dropped around 10% from its February peak, prompting some institutional investors to reduce U.S. equity exposure and increase gold allocations.

Moreover, ambiguity around the Fed’s policy path has further amplified hedging demand. Former President Donald Trump’s proposed tariff measures may induce imported inflation pressures, putting the Federal Reserve in a dilemma between fighting inflation and preventing a slowdown. Market expectations for a June rate cut have declined from 75% to 50%. Consequently, the Treasury market has witnessed heightened volatility, with the MOVE Index surging past 137. Investors, aiming to insulate fixed income portfolios from potential rate shocks, are increasing gold allocations to hedge interest rate sensitivity.

The term premium on U.S. 10-year Treasury notes has shifted into positive territory, indicating that investors now require greater compensation to hold long-term dollar-denominated assets. This, in turn, has reinforced demand for gold as a portfolio diversifier and macro hedge.