Most mining companies have started rebounding from the losses they saw over the past one week due to the drop in precious metals. Usually, the trend in metals determines the trend in mining stocks.
The renewed strength of the US dollar was the predominant factor in the fall of precious metal mining stocks.
Goldcorp and Newmont have seen year-to-date (or YTD) falls of 3.1% and 1%, respectively. New Gold and Sibanye have a YTD rise of 12.3% and 3.3%, respectively. The mining-based VanEck Vectors Gold Miners Fund (GDX) is trading at a marginal YTD rise of 5.1%.
The above four miners are trading at a premium to their 20-day moving averages. Goldcorp and Sibanye are trading below their long-term 100-day moving average, while New Gold and Newmont are above their long-term 100-day moving average.
A reasonable premium over a stock’s price indicates a potential downside correction in price, and a considerable discount to a stock’s price suggests a probable rise in price. The target prices of these miners remain considerably higher than their current trading prices, which suggests a positive outlook for mining shares.
The RSI (relative strength index) levels of most of the miners have fallen significantly over the past month, but with the revival in price, the RSI levels have also revised.