S&P 500 5,235.18 +1.02%EUR/USD 1.0840 +0.21%GBP/USD 1.2710 +0.14%USD/JPY 149.50 −0.18%BRENT $82.40 −0.81%BTC $67,800 −0.21%GOLD $2,341 +0.55%NASDAQ 16,420.55 +0.74%S&P 500 5,235.18 +1.02%EUR/USD 1.0840 +0.21%GBP/USD 1.2710 +0.14%USD/JPY 149.50 −0.18%BRENT $82.40 −0.81%BTC $67,800 −0.21%GOLD $2,341 +0.55%NASDAQ 16,420.55 +0.74%
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Money Talk

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Gabelli Fund Manager Sees Gold Rally Delayed by Middle East Conflict

The ongoing war in Iran and subsequent energy supply disruptions have acted as a temporary ceiling for gold, stalling a potential climb to $5,000 per ounce. Chris Mancini, co-portfolio manager of the Gabelli Gold Fund, argues that while these geopolitical pressures fuel inflation and interest rate hikes, the mining sector remains fundamentally undervalued.

Gabelli Fund Manager Sees Gold Rally Delayed by Middle East Conflict

Mancini contends that if the instability in the Strait of Hormuz had been resolved earlier this year, gold prices would likely have reached the $5,000 mark already. Instead, higher energy costs have forced the Federal Reserve to maintain a restrictive monetary stance. Despite these headwinds, mining companies continue to generate robust free cash flow. While upcoming third-quarter earnings may miss consensus estimates due to rising labor and energy expenses, the industry's underlying profitability remains strong.

A key differentiator in the current market is capital discipline. Unlike the previous bull cycle, producers are avoiding extravagant, high-capital projects in favor of manageable, viable development. However, these improvements have yet to capture the interest of generalist investors. Mancini suggests that shifting corporate strategy from share buybacks to higher dividends—similar to the potential returns at Newmont—could finally attract capital. For now, the market remains focused on the U.S. labor sector as a primary catalyst; a significant uptick in unemployment could force the Federal Reserve to pivot, potentially igniting the next major rally for precious metals.

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