Why Gold Mining Stocks Are Trading At Yearly Lows Today

Gold Mining Stocks Retreat On Strong Dollar And Rising Treasury Yields

Gold mining stocks are trying to settle below the lows that were reached in late February while gold is testing the support level at $1750. Gold mining stocks have also made an attempt to settle below these levels in late July but failed to develop sufficient downside momentum.

Stronger dollar and rising Treasury yields have served as main bearish catalysts for gold mining stocks. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is currently trying to settle above the resistance at 93.10 which is not far away from yearly highs at 93.56.

Meanwhile, the yield of 10-year Treasuries is testing the resistance at 1.38% which served as a major obstacle on the way up in August and September.

What’s Next For Gold Mining Stocks?

This is an important moment for gold mining stocks like Barrick, Newmont or Kinross as the sector is trying to settle below the important support level. In case this attempt is successful, gold mining stocks may gain significant downside momentum.

Rising Treasury yields may present a big problem for the gold market. Gold pays no interest while its safe-haven status has not provided much support in recent months as traders focused on the upcoming reduction of Fed’s asset purchase program.

At this point, the setup is bearish for gold mining stocks as Treasury yields and U.S. dollar are moving higher. However, the situation may change quickly in case the Fed is more dovish than expected. In this scenario, gold will move higher while traders will rush to buy gold mining stocks near yearly lows.

All in all, traders should be prepared for increased volatility in the upcoming trading sessions as the market will likely remain nervous until the Fed announces its Interest Rate Decision and provides commentary on September 22.

For a look at all of today’s economic events, check out our economic calendar.

Why Gold Mining Stocks Are Testing Multi-Week Lows Today

Gold Mining Stocks Fall Together With The Price Of Gold

Gold mining stocks found themselves under strong pressure today as gold made an attempt to settle below $1675 before rebounding towards $1750.

Gold gained strong downside momentum and managed to move from the $1800 level to the test of the support at $1675 in just two trading sessions. Not surprisingly, gold mining stocks also moved lower.

Leading gold mining stocks like Barrick Gold, Newmont Mining, Kinross Gold and Agnico Eagle Mines declined to multi-week lows and have decent chances to continue the downside trend if gold fails to rebound from current levels.

What’s Next For Gold Mining Stocks?

The recent move in the gold market may have a significant impact on gold mining stocks which are almost always sensitive to the dynamics of the gold price.

Last week, gold mining stocks made an attempt to get out of the recent trading and move higher as gold price was stable near the key $1800 level. Now, gold mining stocks may gain material downside momentum if gold fails to find support near the important $1750 level.

It should be noted that several recent developments in individual companies can also hurt market mood. AngloGold Ashanti has recently announced that the company’s Obuasi mine may not resume production in 2021 after an incident in May. IAMGOLD has cut production guidance and increased cost estimates for Cote project.

Traders should also keep an eye on the latest developments in Treasury markets as yields keep moving higher from recent lows which may put additional pressure on gold and gold mining stocks.

The near-term direction of gold mining stocks will depend on whether traders are ready to “catch the falling knife” and buy gold mining stocks near multi-week lows. If current levels do not hold, gold mining stocks may gain serious downside momentum.

For a look at all of today’s economic events, check out our economic calendar.

Why Gold Mining Stocks Are Under Pressure Today

Gold Mining Stocks Retreat As Gold Moves Below The $1800 Level

Gold mining stocks are under strong pressure today as gold declined below the $1800 level after Fed indicated that it expected two rate hikes in 2023.

The weakness is broad, and notable gold mining stocks like Barrick Gold, Newmont Corporation, Kinross Gold or Yamana Gold are down by 4 – 6% in today’s trading session.

Most gold mining stocks have already lost a lot of ground in June as gold’s previous rally was stopped near the $1900 level and traders began to take profits in shares of gold miners.

The recent sell-off in the gold market put additional pressure on gold mining stocks which are now trading at levels that were seen back in April.

What’s Next For Gold Mining Stocks?

Near-term dynamics of gold mining stocks will depend on the dynamics of the gold market. Gold moved from $1900 to $1775 in just five trading sessions and its RSI reached the oversold territory, so the chances of a rebound are increasing.

It should be noted that gold mining stocks provide investors and traders with leverage to the price of gold. This leverage works both ways so gold mining stocks are typically declining faster than the price of gold in case gold moves lower.

Gold mining stocks have started to pull back after rally in March – May before gold began to lsoe ground at a fast pace, so some traders were prepared to the recent sell-off.

However, it remains to be seen whether traders will rush into the segment in the current market environment as higher interest rates present a serious threat to precious metals.

I’d note that Treasury yields have failed to gain additional upside momentum after yesterday’s rally, and the yield of 10-year Treasuries declined from 1.59% to 1.53%. If bond markets calm down, gold prices will stabilize, and gold mining stocks will have a good chance to rebound from current levels.

For a look at all of today’s economic events, check out our economic calendar.

Gold Mining Stocks Pull Back But Stay In Bullish Mode

Gold Mining Stocks Video 18.05.21.

Low Interest Rates And Inflation Fears Provide Strong Support To Gold Mining Stocks

Gold mining stocks pulled back a bit after yesterday’s upside move as gold failed to gain more upside momentum after a successful test of the resistance at $1865.

The pullback was broad-based, and leading gold mining stocks like Newmont Corporation, Barrick Gold, Agnico Eagle Mines, Kinross Gold were under pressure in the current trading session.

However, these stocks remain close to yearly highs and may have a good opportunity to gain additional upside momentum in case the price of gold manages to stay above the $1850 level.

It should be noted that many gold mining stocks had a challenging start of the year as gold price declined and traders were focused on other market segments in search of growth.

However, the situation is changing since gold price managed to get from the lows near $1675 in March to the recent highs at $1875. Continued strong support from the Fed and rising inflation provide a solid setup for further upside for both gold and gold mining stocks.

What’s Next For Gold Mining Stocks?

Traders have already provided strong support to shares of Newmont Corporation which is up by about 25% year-to-date. The performance of Barrick Gold, Agnico Eagle Mines and Kinross Gold is more modest, but traders may use these stocks (and other similar gold mining stocks) as a catch-up play in case gold rally continues.

Valuations of gold mining stocks look low compared to many market segments. Even after the recent rally, Newmont Corporation is trading at less than 20 forward P/E. Barrick Gold’s valuation is about the same, while Kinross Gold is trading at just 9 forward P/E.

It should be noted that gold mining stocks typically provide traders with leverage to the price of gold. This is a double-edged sword since shares of gold mining stocks will likely drop more than the price of gold when the gold market is in a downside trend. However, gold mining stocks tend to significantly outperform gold when the market is bullish.

This phenomenon is already visible this year as gold is yet to get to the levels that were seen at the start of this year while gold mining stocks are moving higher. With some help from the price of gold, the current upside move in gold mining stocks will continue.

For a look at all of today’s economic events, check out our economic calendar.

3 Gold Stocks Exploring the 200-Day Moving Average

After taking a backseat to Bitcoin for the past six months, gold has finally regained some of its shine in recent weeks amid lackluster economic data and concerns about rising inflation.

“It seems to be that it is the fear of inflation rising beyond the US Federal Reserve’s comfort levels driving precious metals, helped by the suggestion of a possible rise in interest rates sooner than the Fed has been predicting all along,” Sharps Pixley’s Lawrie Williams told leading industry publication Mining Journal.

The yellow metal closed 1.6% higher Monday to settle at $1,867.60 an ounce, its highest level in over four months. Gold’s turnaround helped propel these three leading gold mining stocks above their 200-day simple moving average. Below, we take a closer look at each and use technical analysis to identify important chart levels.

Barrick Gold

Toronto-based Barrick Gold Corporation (GOLD) explores for, mines, and sells gold and copper, with key operations in North America, South America, Australia, and Africa. Last year, the miner produced around 5 million attributable ounces of gold and nearly 460 million pounds of copper. Through Monday’s close, Barrick Gold stock has a market capitalization of $44.76 billion and offers a 1.5% dividend yield. It trades up 10.93% on the year.

From a chart perspective, a break above the 200-day SMA in Monday’s trading session may act as a catalyst for a move up to key overhead resistance at $28.50.

Kinross Gold

Also headquartered in Toronto, Kinross Gold Corporation (KGC) is a leading gold and silver miner, producing roughly 2.4 million gold equivalent ounces in 2020. The company, which has used acquisitions for geographic expansion, operates in the Americas, West Africa, and Russia. Kinross Gold stock has a market value of over $10 billion and issues a 1.54% yield. YTD it trades 12.53% higher.

Taking a look at the technicals, a close above the 200-day SMA Monday on above-average volume indicates further upside that could see a test of crucial resistance at $9.30.

Kirkland Lake Gold

With an $11.62 billion market cap and 1.85% dividend yield, Kirkland Lake Gold Ltd. (KL) engages in gold mining and production activities. The company’s assets include the Macassa mine located in northeastern Ontario and the Fosterville gold mine situated in Victoria, Australia. Kirkland Lake Gold stock has gained nearly 6% since the start of the year.

Chart-wise, Monday’s breakout above the 200-day SMA may give bullion bulls the confidence to make a run at multiyear horizontal resistance around $51.

For a look at today’s earnings schedule, check out our earnings calendar.

3 Gold Stocks Ready to Glitter

After a record runup in gold prices during the first half of 2020, demand for the precious metal has eased in recent months amid a shift to risk-on plays and institutional investors diversifying into other inflationary-hedge assets, such as Bitcoin.

However, with central banks pumping enormous amounts of stimulus into the financial system, many analysts think the yellow metal will regain its luster as the greenback decreases in value.

“With record global debt and MMT in place, there is more certainty that it is about time that gold will reprice itself to account for dollar debasement. When faith in the modern monetary system is shaken, there is a tendency to shift towards hard assets, probably justifying why central banks across the globe have been net buyers of gold bullions since the Global Financial Crisis,” Edelweiss chief market strategist Sahil Kapoor told investors, per Kitco.

Let’s take a closer look at three large-cap gold mining stocks that closely track the commodity’s price. We’ll also use technical analysis to identify important trading levels.

Newmont Corporation

With a market capitalization nearing $50 billion, Newmont Corporation (NEM) is the world’s largest gold producer, with an annual consolidated output of around 6.39 million ounces. The gold miner, which has extensive operations in the Americas, Australia, and Africa, offers a 2.68% dividend yield and trades 32.53% higher over the past year but has eased 5% since early November.

From a charting perspective, look for entry points near support at $58.30 while targeting moves to overhead resistance at $68.50.

Barrick Gold Corporation

Toronto-based Barrick Gold Corporation (GOLD) has major mining operations in North America, South America, Australia, and Africa, with its assets significantly boosted in 2018 after its acquisition of Randgold. Last year, the company said it was on track to reach its annual gold production target of between 4.6 and 6 million ounces. The $39.56 billion Canadian-based gold miner yields 1.61% and has gained 21.31% over the past 12 months. Year to date (YTD), the shares have edged 1.8% lower.

Chart wise, look to buy the stock at current levels if support holds at the crucial $22.50 area. Consider booking profits on a move to technical resistance at $28.45.

Kinross Gold Corporation

Yielding 1.72%, Kinross Gold Corporation (KGC) explores for and produces gold in Canada, the United States, Russia, Brazil, Chile, Ghana, and Mauritania. The mining giant, which generates annual gold equivalent production of around 2.5 million ounces, received an upgrade from Barclays last month based on the company’s valuation relative to more diversified mining firms. Though Monday’s close, the gold miner currently trades at around eight times forward earnings, placing it at a significant discount to its historical earnings multiple of 37 times. Although the company’s stock has slipped nearly 5% YTD, it has jumped 40% over the last year.

From a technical standpoint, look for entries near key support at $7 while booking profits on retests of horizontal resistance at $9.30.

For a look at today’s earnings schedule, check out our earnings calendar.

Middle-Week Screening: Gold Glitters and Shines!

Overview and trends

US stocks rose on Monday as investors looked to major earnings on deck this week and awaited the release of the GOP’s coronavirus stimulus plan. Senate Majority Leader Mitch McConnell finally said that Republicans were ready to present their long-awaited $1 trillion COVID-19 package details, as Democrats remained wary. S&P 500 ended up 0.74%, while Dow Jones Industrial Average was higher 0.44%, and Nasdaq Composite shot up 1.86%.

US stock indices ended down from 0.65% to 1.27% yesterday as investors mulled Senate Republicans’ coronavirus stimulus package and a slew of very surprising earnings reports.

The U.S. republicans continued debating on its fiscal relief plan most of the day. The projected $1 trillion packages will include another round of $1,200 payment checks and additional funds for small-business loans.

A large portion of reporting yesterday companies sadly missed their earnings figures, with most disappointments coming from 3M, McDonald’s and even biotech Pfizer. Oil tumbled through the session, with West Texas Intermediate crude dropping as much as 1.5%, to $41.10 per barrel.

Gold was the leading instrument in the 1st half of trading week. Gold prices took a stratospheric leap last week, jumping from the previous week’s support test at $1800 an ounce to the $1900 level that hasn’t been traded since 2011.

Next day Gold jumped to a record high of $1944 per ounce, driven by an uptick in new U.S. coronavirus cases that have added to economic uncertainty. Shares of Moderna surged after the company said it received an additional $472 million in funding for its COVID-19 vaccine.

Trading ideas

According to a new court filing, multiple California state offices are actively investigating Amazon (AMZN) over worker safety concerns as the coronavirus continues to rage throughout the U.S. An eighth Amazon employee has died of COVID-19, and the virus has spread quickly through clusters of employees at factory floors and warehouses nationwide where social distancing isn’t enforced. Amazon’s own shipping centers have reported outbreaks, including one in the Pocono Mountains and another in Oregon.

The earnings date for Amazon is July 31, an overwhelming majority of high-profile analysts think the numbers will be as stellar as never before. Amazon’s average EPS estimate is $3.6 versus $5.01 it actually earned last quarter. It’s easy to guess that Amazon will beat that number indeed. However, even the bigger question will be how the tech giant is going to address these mounting allegations about poor safety of its employees. It looks like this time around it’s no longer just curiosity.

Global payments processor Visa reports earnings today, on July 29, and it will be more than just one more set of quarterly financial numbers. Investors will get a direct insight into how consumer spending is being affected by the pandemic and an uncertain economy. This quarter revenue for the payments processing giant are expected to drop by roughly 17% to $4.81 billion versus $5.84 billion a year ago. This anticipated drop has a lot to do with lower transaction volume as many stores were closed throughout the quarter. With that said, there is optimism for a potential beat driven by increased digital payment volume as more and more people shopped online.

Indeed, dealing with paper money has now become not only unsafe but also unsanitary. So VISA’s performance will be more or less accurately reflecting the real global consumer spending, and households’ entire propensity to consume, and how efficient the world’s largest central banks’ and governments’ efforts to offset the COVID-19 impact. So fasten your seatbelts!

The Australian dollar has rallied rather significantly on Monday, showing signs of life yet again as the U.S. dollar continues to get hammered against most currencies. Aussie pierced below 1.40 mark, and now this level became its support, rather than resistance level. A couple of times over the past several trading sessions it tried to approach it, but the big return looked invariably spectacular.

So, this level now can be seen as a cemented support for the Australian currency. Its further growth towards 1.35 is highly dependent on the continuation of the gold rally. Australia is the second-largest gold producer in the world with 325 tons per year, right after China. By the way, 2019 was a record year for Australian gold production.

So, the momentum the Australian currency has been gaining lately is not just a coincidence, and if greenback keeps getting softer, and metals keep getting stronger, it would be hard to find a better choice than to take a chance on the Aussie.

One of the less-talked-about but more potent beneficiaries of this year’s gold rally Kinross Gold (KGC) is scheduled to announce Q2 earnings results today, on July 29th, after market close.

The consensus EPS estimate is 13 cents and the consensus revenue estimate is around $1 billion (assuming a 20% growth Year-over-Year). Over the last 2 years, Kinross Gold has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.

Kinross is gaining from higher production at its two main deposit fields, which already had shown strong momentum in this year’s first quarter. Strong production is likely to have continued in the second quarter. Further, gold prices have been soaring this year making it the most attractive safe-haven asset. Gold prices have gained around 13% in the second quarter — the highest quarterly percentage increase in more than four years.

by Vladimir Rojankovski, Grand Capital Chief Analyst