XME Rode Gold to a Near Double, Now Freeport’s Q2 Restart Will Test the Rally

SPDR S&P Metals and Mining ETF (XME) nearly doubled to $118 from $62 over the past year.
Newmont generated $1.6B in free cash flow as gold prices surged to $4,900-$5,000 per ounce.
Freeport-McMoRan plans to restart Grasberg mine in Q2 2026 for 300 million pounds of copper.
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The SPDR S&P Metals & Mining ETF (NYSEARCA:XME) has nearly doubled over the past year, climbing from around $62 to $118, as investors pile into commodities exposed to electrification, defense, and monetary policy uncertainty. With top holdings like Newmont (NYSE:NEM), Freeport-McMoRan (NYSE:FCX), and Alcoa (NYSE:AA) combining for roughly 16% of the portfolio, XME functions as a leveraged bet on metals prices and global manufacturing health. Recent strength reflects surging gold prices and copper demand, but the next 12 months hinge on where commodity prices settle as central banks shift policy, and whether production growth at key holdings can meet elevated expectations.

Gold’s rally to between $4,900 and $5,000 per ounce has fundamentally transformed Newmont’s profitability profile. The surge enabled the company to generate $1.6 billion in free cash flow, demonstrating how commodity price momentum directly converts to miner cash generation. This performance exceeded earlier market expectations, as traders had priced gold closer to $3,200 for much of the prior year.

Copper presents a different risk profile for the ETF’s holdings. Freeport-McMoRan faces pressure if prices retreat toward $6.00 to $6.40 per pound, though the company’s planned Grasberg mine restart in Q2 2026 could offset pricing headwinds through volume growth.

The Producer Price Index for commodities has held near 260 for the past year, signaling stable input costs that support current metals valuations. This stability provides a foundation for sustained metals prices, though any significant move in either direction would signal changing demand dynamics. Track COMEX gold and copper futures settlements on CME Group’s website to gauge whether the recent rally has room to run.

Freeport’s Grasberg restart represents the most significant operational catalyst for XME in 2026. The mine could add 300 million pounds of copper, but delays or cost overruns would undermine the bullish thesis.

Execution risk across the sector remains evident in recent operational results. Alcoa fell short of revenue expectations in Q3, though management demonstrated portfolio optimization capability through a $232 million gain from selling its Ma’aden joint venture stake that helped offset operational headwinds.