Gold price drops but still ahead of mining costs

Gold prices slid on Friday after Federal Reserve Chairman Kevin Warsh's remarks in Jackson Hole on inflation, but the price of gold still remained higher than earlier this month – and the World Gold Council reported prices continue to outpace mining costs.

The New York spot gold price during late afternoon trading Friday was $4,465.80 per ounce, down $135.80. Friday afternoon's gold price was still about 12% higher than the lowest gold price this year, when the price of gold briefly dipped below $4,000 to $3,998.02 on July 17, according to the Kitco.com morning fix price chart.

Gold prices have been climbing in the past month, but the price reversed course and fell over 1% on Friday as traders increased bets on an interest rate hike after Warsh's remarks on curbing inflationary pressure, according to Reuters.

Gold had hit a more than three-month high of $4,696.18 on Tuesday, Aug. 25, building on a rally following the U.S. Treasury's announcement last week of support measures for long-duration bonds, according to Reuters. Bonds offer yields but gold doesn't.

Forbes wrote earlier this week that gold futures rose more than 1% on Monday morning to an intra-day high of $4,738.50, while spot gold rose about 1.5% to a high of $4,679, both of which were the highest levels since mid-May.

The U.S. central bank will "have work to do" if policymakers don't get the confidence that they need that inflation is heading down to 2%, Warsh said on Friday, coming closer than he has before to acknowledging interest rate hikes may be needed to ease price pressures, Reuters reported.

"Gold is getting slapped hard as Chair Warsh affirms that inflation isn't meaningfully slowing and the Fed has 'work to do.' While it may once again be 'speak loudly and carry a short stick,' this will make the market price the September meeting as a coin flip," independent analyst Tai Wong told Reuters.

Traders now see a 56% chance of a U.S. rate hike in September, compared to 36% before Warsh's comments, and an 80% chance of a December increase, according to the CME FedWatch tool.

Neils Christensen of Kitco News reported that Warsh said the price stability side of the Fed's mandate is more of a concern than the slowing labor market.

"There are always areas of concern in the labor market – for example, among recent graduates. In general, though, people who want to work, by and large, are holding or finding jobs. They may well be concerned about possible future labor disruptions, but as of now, I believe the labor markets are consistent with full employment," the Fed chairman said.

"But on the price stability side of our mandate, the numbers are more concerning. The Fed's preferred measure of inflation, the 12-month change in the PCE (personal consumption expenditures) price index, stands at 3.7%, while the six-month change is 4.1%," he said.

Even as Warsh was talking, the gold market was trading at session lows after the latest data showed consumer sentiment in the U.S. declining, with shorter-term inflation expectations easing, according to Ernest Hoffman of Kitco.

The University of Michigan announced on Friday that the final reading of its consumer sentiment survey for August was 51.7, he wrote. The data was better than expectations, as the consensus forecast of economists called for a reading of 51, but it was well below July's final reading of 55.2.

"Consumer sentiment confirmed its early month reading, falling about 6% from last month and landing about 11% below a year ago amid continued worries that inflation will remain elevated for the foreseeable future," said Surveys of Consumers Director Joanne Hsu.

Company shares dip

Share prices of gold producers tied to Nevada were down on Friday, as well, including the share prices of Nevada Gold Mines joint venture partners Barrick Mining Corp. and Newmont Corp. Newmont's shares were selling at $128.18, down $4.11, and Barrick's shares were selling at $45.84, down $1.48.

Shares of Kinross Gold Corp. were at $31.38, down $1.13, in late afternoon trading Friday, and SSR Mining shares were at $37.44, down $1.57, while Coeur Mining Inc. shares were at $21.19, down $1.02, and McEwen Inc. shares were at $20.48, down $1.18. Equinox Gold shares were at $18.09, down 55 cents.

Meanwhile, a World Gold Council Gold Hub blog found that even with rising costs in the first quarter of this year, the surge in the average gold price far exceeded the increase in costs, with the 2026 first quarter gold price up 70% over the first quarter of 2025.

Costs for gold producers worldwide rose in the first quarter of this year as gold prices hit records amid war and turmoil in the Middle East, with all-in sustaining costs averaging $1,785 per ounce, up 16% over the 2025 quarter, according to the World Gold Council.

"Rising costs have become a persistent feature of the industry, with the quarter marking the 28th consecutive year-on-year increase in AISC," Oliver Blagden, a metals-focused mine supply analyst with the World Gold Council, said in his new report.

He said the most significant driver for higher costs were royalties that went up with record prices in the first quarter. The spot price of gold momentarily reached as high as $5,595 per ounce in January. Royalty payments are tied to gold prices, and they rose 85% over the prior year.

Blagden wrote that in the first quarter of 2021, royalties accounted for roughly 6% of AISC, but by the first quarter of this year, the royalties made up 12% of the average operation's cost base.

He said, however, that while royalties were a major driver of higher all-in sustaining costs, "attention has also been on the Iran conflict and the resulting disruption. The closure of the Strait of Hormuz and damage to resources and energy infrastructure in the region have disrupted global supply chains, contributing to higher fuel, power, freight, shipping and consumable costs."

Although the report from Blagden was for the first quarter of this year, gold producers with operations in Nevada stated during their earnings updates for the second quarter that they were dealing with higher costs.

The companies reported they were managing the higher costs with measures they had in place, with fuel costs affecting open pit mining operations more than underground operations.

For example, Newmont Corp.'s president and chief executive officer, Natascha Viljoen, and Newmont's new executive vice president and chief financial officer, Brian Tabolt, reported that Newmont is still within cost projections for the year despite higher oil prices, with all-in sustaining costs in the second quarter of $1,621 per ounce.

For every $10 increase in the cost of a barrel of oil, Newmont will see a $60 million impact on an annual basis, Tabolt said in the second quarter webcast.

In another example, SSR Mining's executive vice president and chief financial officer, Michael Sparks, said the company is mitigating high fuel prices through hedging programs, but unhedged diesel costs are exposed to higher prices.

He said in the second quarter webcast that for every $10 per barrel increase, there is a $10 per ounce all-in sustaining cost increase.

SSR, which operates the Marigold Mine in Nevada, is also closely tracking transportation and reagent costs, and consumables represent 15% of costs, according to Sparks.

In the World Gold Council report, Blagden said that "Newmont and several other producers cautioned that a prolonged period of elevated fuel prices could have a greater impact on future quarters."

He said that fuel and power were among the largest concerns for gold miners, but the scale of the impact varied according to local supply chains.

The average diesel price in the United States ended the first quarter up 54% over the fourth quarter of last year, while wholesale diesel prices in Perth, Australia, rose 94% over the fourth quarter of 2026, according to the report.

"Higher fuel prices also had knock-on effects across global freight markets. Bunker fuel costs doubled in early March, while war risk premiums increased," Blagden wrote. "These costs were fed through to miners via the import of consumables and spare parts."