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With many gold stocks cruising towards triple-digit gains in 2025, analysts say next year could be another period of blistering returns for companies mining the yellow metal.

The gold futures contract for February (GC=F) breached US$4,300 per ounce on Friday, a level not seen since October, when bullion hit an all-time high above US$4,350. This historic rally has carried over to the Toronto Stock Exchange, where the mining-heavy materials sector has led the index to record-breaking highs.

Analysts at RBC Capital Markets expect gold to average US$4,600 per ounce in 2026, ending the year at approximately US$4,800 per ounce. In 2027, their team, led by the bank’s head of global metals and mining research, sees bullion averaging US$5,100 per ounce.

“Historically, gold producers have behaved pro-cyclically, resulting in sharply higher costs/capital, rising reserve assumptions, and increasing M&A in a rising price environment, which has ultimately eroded investor returns,” Josh Wolfson and his peers wrote in RBC’s latest global precious metals equities outlook.

Times have changed, he says.

“Today, producers are operating with a significantly more prudent approach to capital allocation and discretionary spending, and we expect reserves to be calculated at a conservative <US$2,000/oz, less than 50 per cent of current gold prices,” Wolfson added. “Gold producers are experiencing a perfect storm, and are behaving responsibly.”

That said, RBC describes its outlook on gold stocks as “more conservative than consensus.” The bank expects capital spending to rise, as producers with extra cash look to squeeze returns from existing projects. They also see all-in sustaining costs, a key industry metric, rising by nine per cent in 2026.

Among the operators, Wolfson and his team say Canadian companies Agnico Eagle (AEM.TO)(AEM), Barrick Mining (ABX.TO)(B), and Kinross Gold (K.TO) have the most downside risk. On the other hand, RBC predicts shares of South Africa-based AngloGold Ashanti (AU) could see “modest upside,” versus its estimates.

Exchange-traded fund (ETF) provider Global X says its Gold Producers Index ETF (GLDX.TO) is the top-performing ETF in Canada year-to-date, excluding leveraged funds. The TSX-listed basket of stocks has gained nearly 178 per cent year-to-date. Barrick, AngloGold, and Kinross are its top three holdings.

“Anytime something is up in the triple digits, I would say that probably exceeds expectations,” Chris McHaney, Global X’s head of investment management and strategy, told Yahoo Finance Canada.

“You might see a similar type of return [in 2026]. With the gold price where it is, generally at all-time highs, the gold producers don’t really need the price of gold to continue going up. They just need it to stay relatively where it is, and they’ll be able to make significant cash flows from their operations.”

Why is gold rising?

A host of complex factors underpin today’s enthusiasm for gold. According to the latest report from the World Gold Council, central bank buying has picked up in recent months, following years of heavier purchasing since Russia’s invasion of Ukraine.

At the same time, investors say that ballooning government debt, especially in the United States, is boosting demand for safe-haven investments, such as gold.

“It is based on the fear that central banks and governments will reduce the value of currencies through inflation to decrease the real burden of debt,” Sprott Asset Management market strategist Paul Wong wrote in a recent report.

“Until policymakers globally decide to address the rampant expansion of debt and deficits without resorting to financial repression policies, the debasement trade will likely remain a persistent feature, limiting the time and scope of corrections for gold and precious metals,” he added.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist.