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by Fawad Razaqzada
After gold's big breakout in the summer and the recent bullish consolidation, I have been drawn to gold miners, and one that has caught my attention now is called Newmont Goldcorp Corp (NEM), which has broken out.
Position: N/A
Fawad Razaqzada
Fawad Razaqzada is an experienced analyst and economist having been involved in the financial markets since 2010 working for leading global FX and CFD brokerages. Having graduated with a degree in economics and leveraging years of financial market experience, Fawad provides retail and professional traders worldwide with succinct fundamental & technical analysis. In addition, he also offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He has also been trading on his personal account for many years. Follow Fawad on twitter @Trader_F_R or visit his website at TradingCandles.com.
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BREAKOUTS
Gold Rush: NEM Breaks Out
01/02/20 05:04:32 PMby Fawad Razaqzada
After gold's big breakout in the summer and the recent bullish consolidation, I have been drawn to gold miners, and one that has caught my attention now is called Newmont Goldcorp Corp (NEM), which has broken out.
Position: N/A
| Newmont Goldcorp Corp is a Colorado based mining company, incorporated in 1921. The company has active gold mines in Nevada, Australia, Ghana, Peru, and Suriname. Its stock is traded in the NYSE with the ticker symbol NEM. |
| At the time of writing, gold was up 15.7% year-to-date while NEM was 20.5% higher, so it was outperforming the underlying precious metal on YTD basis. In fact, the stock was also breaking to new highs on the year, while gold was still trading around $1480/85, some $70 shy of its 2019 peak of around $1550 hit in September. |
| Technically, NEM looks strong. The stock hit a new high for the year after taking out key resistance circa $41.20/23. It had been consolidating in a tight-ish range for a while now and after finding good support from its 200-day average in early November, it has developed a strong short-term trend. If the stock manages to hold its own above this $41.20 breakout level then we could see more gains in the days ahead, with $42.00 being the next bullish objective ahead of Fibonacci-based targets at $42.63 (127.2%) and $44.42 (161.8%) next. |
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| Figure 1. Daily chart for NEM. |
| Graphic provided by: TradingView. |
| |
| Whether or not NEM breaks to new highs will depend above all on the price of underlying gold. There are some concerns that the yellow metal may struggle to make a headway given the massive rally on Wall Street. After all, the conventional wisdom is that a rising stock market should be bad news for safe-haven metals. However, it is not impossible for gold to rise along with stocks. In fact, the negative relationship between gold and the S&P 500 has broken down over the past few years. Both gold and the S&P moved higher in 2016, 2017 and now 2019, and fell in 2018. |
| The precious metal has been supported in part because of central banks driving global interest rates to historically low levels. Yields have been depressed, lifting the appetite for noninterest-bearing metals. After the recent recovery, yields have stopped going further higher for now. Investors are realizing that major central banks are in no rush to exit zero or negative interest rate policy, and QE, any time soon. What's more, the phase one trade deal between the US and China has raised optimism over a full trade deal. This has helped the yuan strengthen slightly, making gold relatively less expensive in yuan terms — an important development given that China is one of the largest gold consumers and more so ahead of the Lunar New Year when gift jewelry purchases tend to rise. |
Fawad Razaqzada is an experienced analyst and economist having been involved in the financial markets since 2010 working for leading global FX and CFD brokerages. Having graduated with a degree in economics and leveraging years of financial market experience, Fawad provides retail and professional traders worldwide with succinct fundamental & technical analysis. In addition, he also offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He has also been trading on his personal account for many years. Follow Fawad on twitter @Trader_F_R or visit his website at TradingCandles.com.
| Title: | Financial Market Analyst |
| Company: | TradingCandles.com |
| London, | |
| Website: | tradingcandles.com |
| E-mail address: | fawad.razaqzada@hotmail.co.uk |
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