Gold mining stocks stabilized near support on Tuesday after the precious metal has regained its shine in the midst of a decline in stock markets and commodities recent ability to reject the closely watched $1,700 level.
“The precious metals have found some traction in the wake of a” risk-off ” in the global trade of shares, the official recession of the labelling for the U.S. economy and because of the market’s ability to reject sub-$1,700, the price for a second day in a row,” Zaner Metals analysts wrote in a research note quoted by MarketWatch.
In the longer term, the Federal Reserve commitment to provide unlimited support to the economy as it recovers from the coronavirus pandemic continues to put downward pressure on the U.S. dollar, helping lift demand for the yellow metal in foreign currencies, the buyers and those who wish to hedge against rising inflation.
Below, we take a closer look at two of the largest gold mining companies, as well as an exchange-traded fund (ETF) that holds a portfolio of companies that operate in the gold mining industry.
Barrick Gold Corporation (GOLD)
Toronto-based Barrick Gold Corporation (GOLD) is one of the leading gold and copper producer operating in North America, South America, Australia, and Africa. The $43.26 billion gold mining giant’s bottom line has increased by 45.5% year on year in the first quarter due to higher gold prices, despite a 9% decline in total gold production. The analysts have a 12-month price target on the security to $29.82, representing a 22% premium from Tuesday, to $24.38 close. On June 10, 2020, Barrick Gold shares have a 1.19% dividend yield and trading over 30% higher on the year.
In recent sessions, the bullion bulls have defended the $22.50, where the stock found at the confluence of support from 2016 top, the month of February, swing high and 50-day simple moving average (SMA). Before entering, the traders may decide to wait for the moving average converge divergence (MACD) indicator to generate a buy signal by crossing above its trigger line. Those who buy at current levels should set a profit target near multi-year resistance at$ 39, but to limit losses if the stock fails to hold above the June low at $22.13.
Newmont Corporation (NEM)
Newmont Corporation (NEM) produces and markets gold, copper, silver, zinc and lead on a global scale. Although the 104 years of gold mines in the cabinet of the first quarter, adjusted earnings fell slightly below Wall Street expectations, the figure has jumped to 43% compared to the same quarter of the previous year thanks to a 20% increase in attributable gold production, and robust, the price of gold. Trading at $57.17, with a market capitalization of $45.88 billion and a 1.8% dividend, the stock surged 32.47% year-on-year, outperforming the gold miners of the industry average during the same period of the order of 15% as of June 10, 2020.
Newmont shares to provide a “buy the dip” opportunity after finding key support at $52.50 – an area on the graph that the lines near the 50% retracement level of Fibonacci stretched from the low of March to May. Swing traders who buy here should provide for a period preceding the 52-week high of $68.84, while managing the downside risk with a stop-loss order placed below the last week low to $52.33.
VanEck Vectors Gold Miners ETF (GDX)
Traders can gain a diversified exposure to gold companies by the purchase of the VanEck Vectors Gold Miners ETF (GDX), which holds a basket of about 50 companies involved in the global gold mining industry. Trading wise, more than 35 million shares in exchange for the hand in an average day penny spread, making the ETF is suitable for a wide variety of strategies. GDX commands a huge asset base of nearly $ 15 billion, with the issues of a 0.56% dividend yield, and it is returned 47.57% so far this year, on June 10, 2020. The fund competes 0.53% management fee.
Over the past three weeks, the ETF, the price fell back to $31 where it meets a significant support from the top trendline of a previous trading range that formed prior to the pandemic sell-off. In addition, the relative strength index (RSI) is below 50, giving the fund plenty of room to move higher before the consolidation. Those who open a long position should consider using the 50-day SMA as a trailing stop to let profits run as much as possible. The protection of capital with an initial stop placed just below $31.