In this article, we will take a look at 8 most undervalued gold stocks to buy according to analysts.
Gold has been on a remarkable run in 2024, solidifying its place as one of the top-performing assets of the year. Its impressive rally reflects not only the metal’s safe-haven status but also several key macroeconomic shifts. Central banks around the world, geopolitical tensions, and shifting market dynamics have all contributed to the surge in gold prices. Analysts are optimistic that this momentum will carry over into 2025. A Reuters report highlights that gold is benefiting from robust physical demand from China and renewed inflows into exchange-traded funds (ETFs), a trend that had stalled since April 2022. J.P. Morgan analysts have emphasized the importance of these ETF inflows, noting that their revival is essential for sustaining gold’s upward trajectory.
Adding further fuel to the rally is the U.S. Federal Reserve’s decision to initiate a rate-cutting cycle. This policy shift has weakened the dollar, making gold more attractive to investors. So far, gold has gained nearly 30% this year, an increase of nearly $595 per ounce, reaching a record high of $2,657 per ounce as of October 11. This is gold’s best annual performance since 2010, significantly outpacing the returns of major stock indices. UBS analysts believe that gold still has room to climb over the next six to twelve months. They argue that the Fed’s ongoing rate cuts, along with the approaching U.S. presidential election, could lead to higher market volatility, encouraging investors to further flock to gold as a hedge.
Goldman Sachs also maintains a bullish outlook, forecasting that prices could hit $2,700 by early 2025. They attribute this projection to growing central bank purchases, which have accelerated since Russia’s invasion of Ukraine. Central banks are increasingly diversifying away from the U.S. dollar to shield themselves from potential financial sanctions, making gold a preferred reserve asset. Goldman strategists also point to geopolitical uncertainties—such as trade tensions or rising U.S. debt—as additional catalysts that could drive gold prices even higher.
Several financial institutions are now projecting gold prices to continue climbing beyond 2025. ANZ sees gold reaching $2,805 by the end of 2025, while BofA forecasts a potential rise to $3,000 per ounce. Macquarie expects a peak of $2,600 per ounce in early 2025, with room for a surge toward $3,000. Similarly, Citi Research predicts prices could hover between $2,800 and $3,000 per ounce within the next two years.
This bullish outlook has attracted increased attention from investors and hedge funds alike, who view gold as a reliable investment in today’s uncertain economic landscape. The combination of falling interest rates, strong physical demand, and robust ETF inflows creates an ideal environment for gold prices to appreciate further. As a result, many investors are also turning to gold mining stocks as a more cost-effective way to gain exposure to the metal’s rally.
In the near future, many investors are eyeing gold as a safeguard against economic uncertainty. “Any case of turbulence in the economy,” explains FxPro senior market analyst Michel Saliby, “is why they’re keeping a decent portion of gold in their portfolio as a ‘safe haven.’” Analysts highlight strong demand from central banks as another key factor, with Joe Cavatoni from the World Gold Council noting that central bank gold purchases are well above the five-year average, driven by “heightened concern with inflation and economic stability.” China’s latest stimulus efforts aimed at boosting consumer spending are also expected to support retail investments in gold, further strengthening its performance, Saliby added.
However, experts warn against overinvesting; Saliby cautions investors not to fall for the “FOMO effect,” advising them to avoid chasing gains just because others are profiting and to maintain a clear risk management strategy. If geopolitical tensions ease, Saliby expects gold prices to correct by $50 to $80, though he remains optimistic that the spot price could surpass the $2,700 forecast for 2025, potentially reaching $2,800 or even $2,900. Still, future gains aren’t guaranteed, and gold has its skeptics. Some argue that gold isn’t always an effective hedge against inflation, suggesting that derivative-based investments may offer better protection against losses. The Commodity Futures Trade Commission has also warned that precious metals are highly volatile, with prices often rising only when economic anxiety is high—benefiting sellers the most during periods of instability, reported Fortune.
Keeping this context in view, we dive into eight undervalued gold stocks that analysts believe offer significant upside potential. These stocks not only provide investors with a cheaper entry point into the gold market but also stand to benefit from the broader rally in gold prices. With solid fundamentals and growth prospects, these gold stocks could be valuable additions to any portfolio looking to capitalize on the ongoing surge in the precious metal.
A close-up of the company’s gold bars and certificates of authenticity, lit up by a spotlight.
Our Methodology
For this article, we used the stock screeners to identify companies in the gold industry with a forward Price-to-Earnings (P/E) ratio of less than 15 as of October 11, 2024. We then reviewed the price targets set by analysts for each stock and compared them to their respective closing prices on October 11 to evaluate the upside potential. Additionally, we analyzed data from approximately 912 elite hedge funds tracked by Insider Monkey during the second quarter of 2024 to assess hedge fund ownership of each company. The stocks are ranked in ascending order based on their upside potential.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
08. Eldorado Gold Corporation (NYSE:EGO)
Upside Potential: 16%
Forward Price to Earnings (P/E) Ratio: 11.65
Number of Hedge Fund Holders: 19
Eldorado Gold Corporation (NYSE:EGO) is an interesting pick for investors looking for undervalued gold stocks. With a forward P/E ratio of 11.65 as of October 12, the stock offers value and an attractive growth potential. Analysts have set a target price of $20.23, representing a 16% upside from its current trading price of $17.51. The company’s fundamentals and geographic diversification position it well in the gold mining industry.
Eldorado Gold Corporation (NYSE:EGO) operates across key mining regions, including Turkey, Canada, Greece, and Romania. It holds full ownership in prominent mines like Kisladag and Efemçukuru in Turkey, as well as the Lamaque complex in Canada. Additionally, the company has a solid foothold in Greece with several projects, including the Skouries and Olympias mines, along with an 80.5% interest in the Certej project in Romania. This diversified asset base helps Eldorado Gold Corporation (NYSE:EGO) manage operational risks while maintaining steady production.
In Q2 2024, Eldorado Gold Corporation (NYSE:EGO) reported gold production of 122,319 ounces, aligned with its annual target of 505,000–555,000 ounces. The company experienced a slight production setback at its Olympias mine due to labor strikes, but management expects stronger output in the second half of the year. Despite higher costs in Q2, driven by increased royalties and labor expenses, total cash costs per ounce were $940, with all-in sustaining costs (AISC) at $1,331 per ounce, both within the company’s 2024 guidance.
Financially, the company remains on solid ground. Eldorado Gold Corporation (NYSE:EGO) reported net earnings of $56 million, or $0.28 per share, boosted by higher gold prices and increased sales. Adjusted net earnings stood at $66.6 million, or $0.33 per share, reflecting one-time adjustments. The company also ended Q2 with significant liquidity, including $595 million in cash and $215 million in available credit, which supports ongoing investments in growth projects like Skouries.
Eldorado Gold Corporation (NYSE:EGO) strategic growth focus and disciplined financial management make it a compelling option among undervalued gold stocks. With stable production, effective cost management, and upside potential in gold prices, it offers an appealing opportunity for investors looking to benefit from the gold sector’s momentum.
07. AngloGold Ashanti plc (NYSE:AU)
Upside Potential: 18%
Forward Price to Earnings (P/E) Ratio: 7.64
Number of Hedge Fund Holders: 17
AngloGold Ashanti plc (NYSE:AU), a global gold mining company with operations across Africa, Australia, and the Americas, deserves a spot among the most undervalued gold stocks to buy now. As of October 12, the company’s forward P/E ratio stands at just 7.64, highlighting its value compared to peers. Analysts forecast an 18% upside potential, with a target price of $32 against the current share price of $27.18. This valuation makes AngloGold Ashanti plc (NYSE:AU) an attractive option for investors looking to capitalize on both its operational momentum and the broader appeal of gold.
The company operates several high-quality assets, including its flagship Geita mine in Tanzania. Beyond gold, AngloGold also produces silver and sulfuric acid as by-products, contributing to diversified revenue streams. Recent performance highlights from its Q2 2024 earnings call reflect the strength of AngloGold Ashanti plc (NYSE:AU) operations. Notably, the company increased production by 2% year-over-year, with Q2 production alone up 12% compared to Q1. Despite flooding-related setbacks in Australia, operations rebounded quickly, demonstrating operational resilience.
A key highlight from the earnings report is AngloGold Ashanti plc (NYSE:AU) success in reducing cash costs. Cash costs fell 1% year-over-year, a remarkable achievement given the challenges faced in early 2024. This positions the company well to capture gains from rising gold prices. Strong cost control has also allowed AngloGold to generate impressive free cash flow of $206 million, a turnaround from an outflow of $205 million in the same period last year.
On the profitability side, AngloGold Ashanti plc (NYSE:AU) reported a 65% increase in EBITDA to $1.12 billion, driven by both higher production volumes and cost efficiencies. Looking forward, the company expects to maintain this positive trajectory, forecasting stronger cash flows and further production gains in the second half of 2024.
The company’s robust liquidity and low gearing provide a solid foundation to invest in both its existing portfolio and future growth opportunities. With new mining areas, like the high-grade Block 10, expected to come online next year, AngloGold Ashanti plc (NYSE:AU) is well-positioned for sustainable growth. Given its undervalued status and strong fundamentals, AngloGold Ashanti plc (NYSE:AU) stands out as a compelling buy for value-focused investors.
