Gold Coast SMSF Strategy: Resources Outlook 2024

Gold's stubborn hold above US$4,033 an ounce is providing a floor under the broader resources sector, but a sharp fall in crude oil, down 2.60 per cent to US$70.05 a barrel, is a reminder that the commodity complex rarely moves in one direction. For the ASX 200, sitting marginally lower at 8,779 on the final trading day of the financial year, the divergence between precious metals and energy is becoming the defining tension for investors with exposure to Australian miners and producers.

The gold price, essentially flat on the day but deeply embedded above the once-unthinkable US$4,000 threshold, continues to underwrite the earnings of the major Australian gold producers. Companies including Northern Star Resources, Evolution Mining and Newmont's Australian operations have benefited from a sustained period of elevated gold revenue, and analysts expect full-year results to reflect materially stronger cash generation. For Gold Coast self-managed super fund trustees who have been rotating out of term deposits and into yield-bearing resource equities, those results are expected to support dividends that were, until recently, the domain of the banks alone.

Energy's retreat complicates the picture

The energy side of the ledger is less accommodating. WTI crude slipping to US$70.05 represents a level that tightens margins for oil and gas producers and raises questions about capital expenditure discipline heading into the new financial year. Woodside Energy, the ASX's most prominent pure-play oil and gas name, and Santos are both exposed to a price environment that is materially softer than the peaks of recent years. Investors in these names should expect cautious guidance at upcoming results briefings, and the prospect of reduced buybacks or rebased dividends cannot be dismissed if crude remains at these levels.

The Australian dollar, firming slightly to 0.6924 against the US dollar, provides a partial offset for locally listed commodity producers. Because most commodities are priced in US dollars, a softer local currency amplifies Australian dollar revenues even when the underlying commodity price is flat or declining. That dynamic is particularly relevant for gold producers, whose cost bases are largely denominated in Australian dollars while their revenues track the US dollar gold price.

Coal and iron ore, the two commodities most directly connected to Australian jobs in mining communities and, by extension, to royalty revenues that fund state budgets, are not reflected in today's snapshot but both markets have been subject to renewed price pressure as Chinese industrial demand remains uneven. That caution filters through to diversified majors such as BHP and Rio Tinto, which carry significant index weight on the ASX 200 and dominate many passive super fund allocations.

For Gold Coast readers assessing their portfolios at financial year end, the message from commodity markets is nuanced rather than alarming. Gold's strength is real and likely to persist given central bank buying and geopolitical uncertainty. Energy's softness warrants a review of overweight positions in oil and gas producers. The AUD/USD rate, sitting just below 0.70, continues to act as a quiet backstop for the sector as a whole.

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