Gold equities are expected to remain one of the most attractive areas within mining in 2026, according to Jefferies analysts.
The firm wrote that valuations, balance sheets and free cash flow generation leave the gold sector “in its best shape in years,” supporting a constructive outlook for equities despite expectations for price consolidation.
“We remain bullish on gold equities in 2026 given attractive valuations, even as we are neutral on gold,” the analysts wrote, adding that gold companies are positioned to expand margins and generate higher free cash flow year-over-year.
Jefferies expects this to occur as long as cost pressures remain contained, noting that there has been “no major cost inflation yet.”
The analysts believe the structural drivers that underpinned gold’s strength in 2025 are likely to carry into 2026. These include de-dollarization, persistent concerns around the US fiscal trajectory, macroeconomic uncertainty, central bank buying and physical demand through ETFs and other channels.
They also reiterated a long-held view on gold’s role in portfolios, stating that “we view gold as the only true safe haven left.”
That said, Jefferies does not expect a repeat of last year’s sharp price gains. The firm’s base case is for gold to remain rangebound in 2026, with the potential for a period of consolidation.
Real interest rates remain a key swing factor, particularly as markets assess how US monetary policy may evolve under a new Federal Reserve chair.
While higher or stable real rates could cap upside, Jefferies wrote that consolidation should still be constructive for the sector. “Our base case is gold prices remain rangebound in 2026, and there could be a period of price consolidation, which we view as still positive for the sector,” the analysts wrote.
According to Jefferies, 2025 marked a turning point for gold miners, with free cash flow becoming a defining feature of the sector.
“The sector looks extremely healthy,” the analysts wrote, highlighting strong balance sheets, disciplined cost control and rising shareholder returns.
Jefferies noted that nine out of 12 gold miners under its coverage are now in net cash positions, while cost inflation has remained below 5% and real all-in costs are under US$2,400 per ounce.
Looking into 2026, Jefferies expects these favorable conditions to broadly persist, with a few notable shifts. Some upward pressure on labor and consumables is anticipated, though still below 10%, while lower energy costs should act as a partial offset.
The firm also expects higher gold prices to influence reserve calculations, potentially extending mine lives without materially impacting near-term margins. The analysts believe sustained high gold prices and growing cash balances will eventually refocus investor attention on growth.
“The longer gold prices remain elevated, and the more cash companies have on their balance sheets, the more investor attention will turn to growth,” the analysts wrote.
This could set the stage for increased merger and acquisition activity, as financial discipline gradually gives way to strategic expansion.
Top gold picks
Jefferies’ preferred gold names for 2026 reflect this mix of valuation appeal, free cash flow and potential catalysts.
Among large-cap miners, Barrick Gold Corp. (TSX:ABX, NYSE:GOLD) is the firm’s top pick, which it views as undervalued relative to peers and its implied sum-of-the-parts valuation. Barrick is expected to deliver the highest 2026 free cash flow yield among large-cap gold miners, at roughly 12%, with multiple levers to unlock value through asset monetization, portfolio simplification and buybacks.
Alamos Gold Inc (TSX:AGI, NYSE:AGI) is seen as a catch-up opportunity among mid-caps. Jefferies cited the quality of its asset base and said improved performance at the Magino mill, along with a forthcoming Island Gold expansion study in the first quarter of 2026, could drive a re-rating.
Royal Gold, Inc. (TSX:RGL) was also highlighted, with Jefferies arguing that its valuation discount is unjustified. Greater clarity around medium-term growth, including contributions from the Sandstorm acquisition and exposure to the Fourmile royalty, could support improved market sentiment. While the firm remains cautious on new royalty and streaming deals at current gold prices, it expects Royal Gold to prioritize deleveraging rather than pursuing lower-return transactions.
Outside of gold, Jefferies said it has become more cautious on copper equities due to valuations, even as it remains positive on copper prices.