FTSE 100 Mining Stock Fresnillo Plummets 23% as Gold Prices Fall

Fresnillo PLC, a major player in the FTSE 100 mining sector, has seen its stock price tumble by 23% over the past two weeks, a significant decline driven by a sharp drop in the prices of gold and silver. Currently, gold trades below $4,000 per ounce, while silver has decreased to $45, down from $53 just weeks prior. Despite this recent downturn, Fresnillo’s stock has increased more than 200% since the beginning of January 2023.

The recent price drop has prompted investors to sell off their shares in Fresnillo, primarily due to the company’s reliance on these two precious metals for revenue. Yet, some analysts suggest that this downturn might provide a buying opportunity for long-term investors willing to navigate the market’s volatility.

Market Dynamics and Future Outlook

The underlying factors affecting the gold market remain complex. As geopolitical tensions persist and inflationary pressures continue, the demand for gold as a safe-haven asset has not diminished. Analysts question whether the current environment will stabilize or if it will continue to be characterized by uncertainty. According to David Russell at bullion dealer GoldCore, the market’s reaction to gold reflects a profound shift in investor confidence, stating, “Gold’s performance in 2025 reflects more than the strength of a rally. It marks an acceptance of a new reality.”

While discussions of a potential trade deal between the United States and China could provide short-term relief to the gold market, the long-term outlook remains cloudy. Central banks and institutional investors continue to diversify their portfolios by increasing their gold holdings, a trend that is unlikely to reverse soon.

Fresnillo’s Financial Position

Currently, Fresnillo offers a forward-looking dividend yield of 3.6%, which may appeal to income-focused investors. However, the sustainability of this dividend depends significantly on the company’s earnings, which are vulnerable to continued declines in precious metal prices.

Despite these challenges, Fresnillo operates as the world’s largest primary silver producer, and silver’s demand in industrial applications—ranging from solar panels to electric vehicles—remains robust. The supply of silver is constrained due to long development timelines for new projects, often hampered by environmental regulations and permitting processes. This structural limitation could benefit Fresnillo in the long run, as demand for silver is expected to rise significantly over the next decade.

In the short term, many retail investors appear to be taking profits or minimizing losses by selling their shares. This behavior is common following substantial price increases in commodities. Consequently, Fresnillo’s share price now aligns more closely with analysts’ target of £22, slightly above the current price of £20.74.

For those with a long-term investment strategy, the current dip in Fresnillo shares may represent an opportunity worth considering. As the market continues to evolve, staying informed about price movements and market sentiment will be crucial for making strategic investment decisions.

Investors interested in Fresnillo PLC or similar stocks would benefit from monitoring ongoing market trends and expert recommendations. With careful analysis, potential investors may find opportunities in what currently appears to be a challenging market environment.