A Technical Analysis of Intermediate Gold Miners



Moving averages

Traders and investors also look at moving averages while making market entry or exit decisions. Usually, if a stock is trading below its 20-day moving average or 100-day moving average, it’s an indication that the stock is oversold. Similarly, if a stock is trading much higher than its 20-day moving average or 100-day moving average, it indicates an overbought position.

In this part of our series, we’ll see what the technical trend says for gold miners.

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Gold miners’ moving averages

Almost all intermediate gold miners are currently trading above their respective 100-day and 20-day moving averages. The above table shows the moving averages, forward target prices, and returns of four intermediate gold miners.

Agnico Eagle Mines (AEM), Iamgold (IAG), and New Gold (NGD) are trading 9%, 5%, and 2%, respectively, above their 100-day moving averages. Eldorado Gold (EGO) is trading 1% below its 100-day moving average.

Relative strength index

As the RSI (relative strength index) approaches the 70 level, it means the asset may be overvalued and is a good candidate for a fall in prices. Likewise, if the RSI approaches 30, it’s an indication that the asset may be oversold and will likely become undervalued.

Based on September 22, 2016, closing prices, only Eldorado is trading above 60. New Gold is trading at only 47.

As the gold prices pulled back due to the Federal Reserve rate hike expectations, miners also gave up some of their gains. The technical indicators point to a near-term potential upside in the intermediate miners.

The VanEck Vectors Gold Miners ETF (GDX) and the SPDR Gold Trust ETF (GLD) are also trading at 3%, above their 100-day moving averages.

Having looked at the technical parameters for gold miners, let’s look next at gold’s fundamental valuations and determine the potential upside or downside.


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