Gold Prices Supported by Rising Oil, PMI Highs, and Newmont Costs
By John Nada·Apr 24, 2026·5 min read
Surging oil prices and rising mining costs are creating a strong support for gold prices amid inflation pressures and economic uncertainties.
Rising oil prices, a 47-month high in PMI, and surging mining costs are reinforcing a robust support for gold prices. Brent crude reached $103 per barrel, reflecting a dramatic increase in energy costs that feeds into broader inflationary pressures across the economy.
The April flash PMI report from S&P Global indicates manufacturing input costs at a 10-month high, underscoring inflationary trends. This environment suggests that gold, currently priced at $4,738, is positioned well despite a strengthening dollar. The market appears to be grappling with stagflation, where economic growth exists alongside accelerating costs, complicating the Federal Reserve's decision-making.
Newmont, the largest gold producer, reported a significant increase in mining costs, jumping $322 to an all-in sustaining cost of $1,680 per ounce. This rapid rise in production costs signals a tightening supply of new gold, establishing a structural price floor that could limit downside for gold prices in the near future.
The dynamics of the gold market are intricately tied to the fluctuations in oil prices. With Brent crude hitting $103.67 per barrel, this marks a staggering 54% increase from a year ago. Such drastic surges in energy prices inevitably feed into consumer price inflation, further entrenching gold's status as a hedge against inflation. Investors often turn to gold during times of rising costs, which is particularly relevant in the current economic climate.
While oil's inflationary pressure typically drives investors toward gold, the current higher oil prices also reinforce expectations for prolonged interest rates. This dynamic could strengthen the dollar and elevate the opportunity cost of holding non-yielding assets like gold. Analysts from Goldman Sachs caution that if oil flows through the Strait of Hormuz remain restricted, Brent could average $120 by Q3 2026, further complicating the market landscape for gold.
The interplay between oil prices and gold is multifaceted. Rising oil is inflationary, but it also heightens the risk environment, leading to a complex decision-making landscape for investors. Gold doesn't just thrive in recessionary contexts; it can perform well when central banks are caught in a bind, as indicated by the current PMI reading and rising costs. The April PMI data shows manufacturing expanding at a rapid pace, but the simultaneous increase in input costs illustrates a concerning trend. This scenario of stagflation presents a unique opportunity for gold, which thrives in environments where central banks find themselves with limited options.
Newmont's report underscores the challenges facing gold production. The company's all-in sustaining cost (AISC) has jumped substantially, reflecting broader industry trends of increasing operational costs. This sharp rise in production costs not only signals a tightening supply of new gold but also indicates that the gold price is likely to remain supported at or above current levels. As Newmont's stock has more than doubled over the past year, institutional investors appear to be betting on a sustained high-gold-price environment, reinforcing confidence in gold as a safe haven.
Meanwhile, silver exhibited notable volatility, reversing its previous outperformance against gold. After outperforming gold 2-to-1, silver saw a decline of approximately 3.5%, whereas gold's decline was less than 0.3%. This shift illustrates silver's dual role as both an industrial and a monetary asset, subjecting it to unique market pressures and requiring a longer-term conviction from holders. The dual identity of silver means that it is more sensitive to economic cycles and market sentiment than gold, making it a more challenging investment in uncertain times.
The geopolitical landscape surrounding oil is also a critical factor influencing gold prices. President Trump's recent order for the U.S. Navy to take action against mine-laying boats in the Strait of Hormuz underscores the potential risks to oil supply, which could lead to further price spikes. Before the onset of conflict, this vital waterway accounted for roughly 20% of the world's traded oil. Such geopolitical instability can lead to increased demand for gold as a safe haven asset, particularly if tensions escalate further.
The current PMI report from S&P Global reflects both optimism and caution. While manufacturing data points to expansion, the accompanying rise in input costs signifies ongoing inflationary pressures. Notably, S&P Global has linked the rising costs directly to the impacts of the ongoing Iran war. This scenario illustrates the complexities of the current economic environment where output may be expanding, but costs are also accelerating, leading to a stagflationary backdrop that could favor gold.
As inflationary pressures mount alongside rising production costs, the structural dynamics of both gold and silver markets are evolving. Investors should remain vigilant, recognizing that the current landscape may favor those prepared to navigate the complexities of geopolitical tensions and economic indicators. The dual role that gold plays as a hedge against inflation and a safe haven during times of uncertainty will likely keep it in focus for investors looking to protect their capital.
Moreover, the structural supply deficit in silver is now in its sixth consecutive year, further complicating the investment landscape for this precious metal. Investors must understand that the fluctuations in silver prices may not directly correlate with those of gold, given its unique market dynamics. The historical volatility of silver can be daunting, especially in times of geopolitical stress, which often leads traders to prioritize gold as a more stable investment.
In light of these developments, the gold market is likely to remain resilient amidst the challenges posed by rising oil prices and mining costs. The interplay of inflation, interest rates, and geopolitical risks creates a complex environment for investors. As seen in recent trends, gold's ability to maintain its value in such turbulent times is paramount, making it an essential asset for preserving wealth.
Ultimately, the future of gold hinges not only on inflationary trends but also on the broader economic environment and the Fed's responsiveness to these challenges. As central banks navigate these uncharted waters, gold may continue to solidify its role as a critical asset in the portfolios of investors seeking stability and protection from the inevitable uncertainties that lie ahead.