Hello, everyone! This week, we will be focusing on Newmont Corporation (NYSE: $Newmont(NEM.US)$), the world’s largest gold miner, which also produces copper, silver, zinc, and lead. In this article, we’ll explore the latest trends and take a close look at the company’s recent market activity.
What’s new?
On July 16, 2024, Comex gold futures surged 1.6% and settled at a record-breaking $2,467.80 an ounce, surpassing the previous settlement high of $2,438.50 on May 20.
The climb was attributed to expectations of Federal Reserve interest-rate cuts later in the year, with analysts touting long-term prospects for further gains in the precious metal.
According to the CME FedWatch tool, likelihood of a Fed rate cut in September has surged to over 93% as of July 17, compared to less than 60% a month ago.
Newmont, as the world’s largest gold company, benefited from this trend, with its stock price soaring 18% over the last 30 days. In contrast, the benchmark S&P 500 index just increased by 3% during the same period.
Newmont boasts the highest gold mineral reserves among its major competitors, Barrick Gold (NYSE: GOLD) and Agnico Eagle (NYSE: AEM). While Barrick Gold indicates 77 million ounces of gold and Agnico Eagle indicates 53.80 million ounces, their combined reserves are nearly equivalent to Newmont’s reserves alone. This could be an indication of Newmont’s strength in the long term.
Chart of the day
Trend analysis:
Despite the recent all-time high for gold, Newmont’s shares (NEM) have struggled to recover from significant losses over the past two years, as shown in the weekly chart.
The daily chart, however, offers a more positive outlook. Since hitting a multi-year low of $29 in late February, the stock has steadily risen, surging over 60% in five months and breaking out of a rectangle formation, a well-known continuation pattern.
Technical indicators:
● NEM has demonstrated a strong short-term upside momentum by trading well above major moving averages (MAs), including the 20-day MA and 50-day MA.
● Despite breaking out of the rectangle formation, the trading volume has not significantly increased, indicating a relatively modest buying interest.
● The relative strength index (RSI) and KDJ indicator have entered the overbought territory, which might signal a potential price pullback in the near future.
● A shooting star candlestick pattern appeared on July 17, signaling a decrease in buying interest and a possible price correction.
Next move?
NEM is currently trading at a 52-week high with no visible resistance in the near term. However, traders may remain cautious of a potential price pullback.
After breaking out of the rectangle formation, a minimum price target may have been reached, which is determined by adding the rectangle’s height to the breakout point.
Moreover, the RSI and KDJ indicators are indicating that the market is overbought, while the trading volume has remained relatively stagnant. This lack of significant increase in trading volume implies that the bulls may not have substantial control over the market.
This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve.
All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
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