(Yicai) July 18 -- Eight of China’s leading gold miners are projecting their profits to swell more than 50 percent in the first six months from a year earlier, and three of them are anticipating their profits to more than double, as gold prices soar to new highs this year on the back of US tariff uncertainties.

The eight listed Chinese gold mining companies that had released their earnings predictions for the first half as of yesterday are expecting to rake in a combined net profit of at least CNY31.7 billion (USD4.4 billion) in the six months ended June 30.

China’s three biggest miners Zijin Mining Group, Zhongjin Gold Corp. and Shandong Gold Mining are together forecasting a net profit of at least CNY28.3 billion (USD3.9 billion), accounting for around 89 percent of the sector’s total.

Gold prices have been hitting new highs this year on the back of tariff uncertainties. At one point, the London gold price topped USD3,500 per ounce, up 26 percent from a year ago.

And buoyed by strong demand and high prices, gold mining firms have been ramping up production.

The high gold price is the key driver behind the strong performance of gold miners’ stocks, an industry insider said. In the first half, international spot gold prices repeatedly hit record highs, peaking at just over USD3,500 per ounce. If gold prices level off in the second half, miners could see their earnings growth slow.

The stellar earnings come down to both higher gold prices and increased output, Liu Tingyu, manager of gold Exchange-Traded Funds at Maxwealth Fund Management, told Yicai.

However, despite the surge in earnings, gold-related stocks have started to show signs of weakening recently. Market volatility around tariffs has caused gold prices to tumble to about USD3,300 per ounce. And a number of gold miners' share prices have fallen over the past month, with Chifeng Gold being the hardest hit with its stock losing 16 percent of its value.

The stronger earnings are also helping to push down the price-to-earnings ratios of these companies, Liu said. Based on the recent gold price of around USD3,250 per ounce, the average price-to-earnings ratio for major gold miners is now about 13.5 times. Historically, the sector has had a price-to-earnings ratio of around 20 times, suggesting there is still room for valuations to recover.

There is still room for both gold and gold miners’ stocks to rise in the medium- to long-term, Liu said. With US tariffs and rising deficits continuing to erode confidence in the dollar and US Treasuries, the global trend toward “de-dollarization” is picking up pace. Central banks in emerging markets such as China and India still hold far less gold relative to the global average, so there is plenty of motivation for them to keep adding to their gold reserves.

Editor: Kim Taylor