Franklin Gold And Precious Metals Fund Q2 2025 Commentary

2025-08-01 05:00:00 ET

Key Takeaways

• Precious and Base Metals Markets: In the second quarter of 2025 (2Q25), a combination of aggressive US trade policy, geopolitical tensions and military conflicts, ongoing inflationary concerns, central bank buying and US dollar devaluation (-7.0% versus other major currencies, to a three-year low) supported a 5.7% gain in gold prices, which ended June at $3,303 per troy ounce. While these conditions have pushed the metal 25.9% higher so far this year, gold's rally lost momentum in May and June, when bullion mostly traded in the $3,300 to $3,400 range. Gold's "haven" demand eventually eased amid a combination of improving economic sentiment, milder-than-expected inflation reports, signs of progress in trade talks and easing tensions in the Middle East. Silver, platinum and palladium all fared better than gold as they posted respective quarterly gains of 5.9% (to $36.11 per ounce), 36.2% (to $1,359) and 11.7% (to $1,107), with most of the rise occurring in June. In the global base metals complex, the London Metal Exchange ( LME ) Index, which tracks prices on benchmark three-month futures contracts for copper, aluminum, nickel, tin, lead and zinc, was negatively impacted by lingering economic growth concerns yet increased 0.8% in 2Q25 as it gradually pulled out of an April slump. Prices among these major industrial metals were split, with the quarterly gains for LME copper, aluminum and lead mostly offset by the declines in nickel, tin and zinc. The 1.6% rise in in LME copper prices was fueled by a sharp decline in warehouse stockpiles, which in late June were at the lowest levels since August 2023.

• Contributors: Off-benchmark portfolio exposure to companies that produce industrial metals and non-gold precious metals, plus a long list of off-index or overweighted gold industry stocks that topped the benchmark return.

• Detractors: Individual stocks that pared the fund's narrow measure of relative outperformance in the gold industry.

• Outlook: Record-high gold prices delivered robust cash generation in many gold miners' first-quarter financial reports, and we believe significantly higher 2Q25 prices should amplify these results.

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