Gold's Response to Conflict: Brian Chu Shares Market Outlook

In the wake of rising tensions between Israel and Iran, the gold market has seen heightened volatility. Brian Chu, founder of the Australian Gold Fund, joined Ausbiz to offer his insights on how the conflict is influencing gold and mining stocks.

Gold briefly spiked to over US$3,440/oz as news of the conflict broke, while oil also jumped. However, both quickly pulled back-and gold stocks mirrored that movement. "We saw strong early gains in gold producers, but those were erased by afternoon," Brian noted. "It signals a more measured investor reaction this time."

One reason? The conflict may not escalate as sharply as past events. With limited military response from major powers, investors seem cautious about pricing in prolonged geopolitical risk.

"Unlike previous conflicts, this time we're seeing verbal support, not boots on the ground and the market knows the difference," he explained.

More importantly, Brian believes large-cap gold producers are currently overvalued. His proprietary Gold Stock Valuation Index, which compares the ASX Gold Index to gold and the gold-oil ratio that drive the value of gold producers, shows many producers have stretched margins.

Instead, he sees greater opportunity in explorers and early-stage developers, tracked through his Speculative Gold Stock Index. Companies like Meeka Gold and Investigator Resources are attracting investor attention with strong assets, funding activity, and upside potential.

"Rotating from producers into high-quality developers could be the smart play right now," Brian suggests. While short-term uncertainty remains, the longer-term fundamentals for gold miners - still look strong.

Watch the full interview and explore more insights on our websites at the Australian Gold Fundand GoldHub Australia.