Lingbao glitter fades with gold peak’s passing

The gold producer’s profit boomed in the first half of this year on record gold prices, but it faces an uncertain future with the precious metal’s recent pullback

Key Takeaways:

• Lingbao Gold said it expects to report its profit jumped about 50% in the first half of 2026
• The company’s outlook is cloudy as gold prices move sharply lower from record highs reached early this year

By Lau Chi Hang

Gold was on a tear for most of the past two years, more than doubling from about $2,000 an ounce at the end of 2023 to nearly $4,600 by the end of last year. The rally continued into 2026, as the price climbed higher still, like a runaway horse, skyrocketing to $5,600 within a single month at the start of the year.

Lingbao Gold Group Co. Ltd. (3330.HK) was one of many gold companies to benefit from that boom, pumping up its profits over the period. Last week, Lingbao said it expects to report revenue of 7.9 billion yuan ($1.17 billion) to 8.1 billion yuan for the first half of this year, up by a modest 1% to 4% year-on-year. But its profit fared much better, jumping by 42% to 57% over the period to between 950 million yuan and 1.05 billion yuan.

Climbing profits

The company attributed the strong profit gains to its “steady advancement of production and operation” in the first half of the year, along with ongoing cost-cutting and efficiency-enhancing measures. And then, of course, there was the significant jump in gold prices during the period. Secondarily, the company also cited the April consolidation of its Simberi gold mine in Papua New Guinea into its financial statements, which helped its earnings.

Lingbao also pointed out its first-quarter profit was partly undermined by a 260 million yuan loss from fair-value changes in its convertible bonds, coupled with 22.11 million yuan in related financial expenses.

Even so, Lingbao’s financial report card for the six-month period was quite strong overall. The company’s stock breached the HK$16 mark the day after the alert, closing 6% higher on the day.

Lingbao produces gold, silver, copper and sulfuric acid and engages in a range of activities, including mining, exploration, and smelting. The company held 34 mining and exploration rights covering an area of 187.47 square kilometers at the end of last year, with a total of about 148.48 metric tons in estimated gold reserves, equivalent to 4.77 million ounces.

The company has enjoyed four consecutive years of rising profits, climbing from 230 million yuan in 2022 to 1.56 billion yuan last year. While it may like to attribute that growth to its own operational performance, the primary driver was the explosive rally in gold prices. Accordingly, understanding Lingbao’s fate requires understanding the pulse of the bullion market.

Gold selloff

Gold got off to a strong start this year, surging in January to as high as $5,600 an ounce at one point. The rally was supported partly by investor expectation for a rate cut by the U.S. Federal Reserve, which tends to make gold more attractive as an investment option. Gold’s upward momentum was expected to continue as the dollar weakened, making $6,000 an ounce seem attainable.

Even the World Gold Council, in its “2026 Gold Outlook” report, noted that geopolitical uncertainty was likely to continue this year, another factor that tends to support gold investment. The report said slowing economic growth, compounded by falling interest rates, could produce modest gains for gold prices. And a worsening economic landscape and intensifying geopolitical uncertainties could drive prices even higher.

When the U.S.-Iran broke out in February, many assumed the gold rally would just intensify. But the momentum unexpectedly disappeared after a late January peak, and prices have been tumbling ever since. They recently dropped to about $4,000, down nearly 30% from their highs.

Some suggest that while investors initially looked to gold as a safe-haven investment, things changed with the threat of returning inflation after the U.S.-Iran conflict caused a sharp spike in oil prices. That meant the U.S. might be forced to raise interest rates in response, rather than earlier expectation for a rate cut, undermining gold prices.

At the same time, some investors also began to take profits after the prolonged rally. That selling only accelerated as hopes dwindled for rate cuts this year, triggering a flood of sell orders that dragged down prices even further.

With the U.S.-Iran conflict unlikely to end anytime soon, hopes for a U.S. rate cut have pretty much disappeared, with the dollar beginning to strengthen. The U.S. Dollar Index has climbed from its February low of about 96 to its recent level of 101, and the upward trend looks likely to continue. In such an environment, gold prices will likely struggle for the rest of this year, and don’t look set to touch their previous highs anytime soon.

Cyclical movement

In response to the changing environment, the World Gold Council now expects gold prices to hover around the $4,100-an-ounce mark, noting that a return to $4,500 is only possible if interest rates begin to fall.

Several investment banks have also become more conservative on gold. JPMorgan expects the price to range between $4,300 and $4,500 an ounce in the third and fourth quarters, while Bank of America has adjusted its full-year average target to $4,360. HSBC anticipates an even broader trading range of $3,800 to $4,700.

A trading band around the $4,000 level will likely undermine Lingbao Gold and its peers in the second half of the year, at least in terms of sustaining their recent profit gains. Should the precious metal weaken further, dipping below the $4,000 mark, the company’s profits could even start to contract.

After all, everything moves in cycles. Historians will remember that gold staged an epic rally in the 1970s, skyrocketing 20-fold from $35 per ounce. The glory days then faded in the 1980s, followed by steady declines that drove prices as low as $250 an ounce by 2000. Back then, no one believed the metal would ever reclaim its former glory, captured by the market adage, “Yesterday’s gold is today’s scrap copper.”

But just when gold looked utterly abandoned, it began to stabilize and started to rise again before the explosive growth of the last few years. Now, the big question becomes where the metal is headed next, which will dictate the fate of Lingbao Gold and others whose business centers on the precious metal.

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