Gold price surge brings huge gains to producers in Q1’26, WGC says

Spot gold prices touched historic highs, momentarily reaching $5,595 per ounce in January.

Record gold prices outpaced rising mining costs in Q1'26, generating unprecedented margins and cash flows for producers despite persistent inflationary pressures and regional geopolitical disruptions, according to a report by the World Gold Council (WGC).

Global average gold producer All-In Sustaining Costs (AISC) rose by 5 per cent quarter-on-quarter and 16 per cent year-on-year to $1,785 per ounce during the first quarter of 2026. The period marked the 28th consecutive year-on-year increase in AISC for the gold mining sector.

The report highlighted that escalating royalty payments served as the primary cost driver for the quarter. Spot gold prices touched historic highs, momentarily reaching $5,595 per ounce in January. This revenue expansion led royalty payments to surge by 24 per cent quarter-on-quarter and 85 per cent year-on-year, doubling their share from approximately 6 per cent of AISC in Q1'21 to 12 per cent of the average operation's cost base in Q1'26.

As per WGC, fiscal regime changes and growing resource nationalism in West Africa also accentuated cost burdens across several jurisdictions. Ghana introduced a sliding scale royalty system in March, reaching up to 12 per cent for prices above $4,500 per ounce. Burkina Faso introduced a sliding system in 2025, reaching 10 per cent between $4,000 and $4,500 per ounce, while Mali implemented higher rates of 9.5 per cent at $4,100 per ounce in 2024. Consequently, royalty expenses surged by 220 per cent year-on-year at IAMGOLD's Essakane mine in Burkina Faso, accounting for 35 per cent of cash costs, while Resolute Mining identified royalties as a key factor pushing costs at Syama above guidance.

Despite these cost increases, average gold prices rose by 17 per cent quarter-on-quarter and 70 per cent year-on-year. This price movement drove average AISC margins up by 25 per cent quarter-on-quarter and 134 per cent year-on-year to a record $3,076 per ounce.

The report noted that miners maintained strict capital discipline throughout the period, directing substantial cash flows toward dividends and share buybacks.

"Newmont returned $2.7bn to shareholders after generating its highest ever quarterly free cash flow (FCF) of $3.1bn and has approved an additional $6.0bn share buyback programme," the report stated.

"AngloGold Ashanti also generated record FCF of $1.2bn and moved from a net debt position into net cash," the report added.

Supply chain disruptions from the Iran conflict, including the closure of the Strait of Hormuz, increased global energy, freight, and consumable expenses. While wholesale diesel prices rose 54 per cent in the US and 96 per cent in Perth, large and intermediate producers remained largely insulated through hedging, inventories, and long-term procurement contracts.

The WGC noted that "costs are expected to rise further, as the Iran conflict and associated supply chain disruptions persist. Given that much of the escalation occurred late in Q1'26, the full impact on fuel, freight and consumable costs is likely to become more apparent during Q2'26, placing additional pressure on margins."

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