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How Mining Stocks Are Reacting to Movement in Precious Metals

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Miners’ performances

Precious metal mining companies typically follow precious metals. Precious metals seem to be in the doldrums over the strength of the US dollar and the Federal Reserve’s decision to raise interest rates several more times this year. The recent slump in the demand for haven assets has also affected mining stocks.

In this part of the series, we’ll look at the primary technical readings—moving averages and RSI (relative strength index) scores—of a select group of miners. The miners we’ve selected for analysis are New Gold (NGD), Agnico Eagle Mines (AEM), Wheaton Precious Metals (SLW), and IAMGOLD (IAG). These miners have fallen 25.8%, 7.4%, 3.7%, and 2.4%, respectively, YTD (year-to-date). The VanEck Vectors Gold Miners ETF (GDX) posted a YTD loss of 2.5%. Wheaton Precious Metals was the only miner in this group that didn’t gain on Monday, May 7.

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Moving averages

SLW and IAG are trading above their 20-day and 100-day moving averages, while AEM is trading below its 20-day and 100-day moving averages. NGD is trading above its 20-day moving average but below its 100-day moving average.

A stock trading at a huge discount to its moving average suggests a potential rise in price, while a significant premium indicates a decline. All four miners’ target prices are considerably higher than their current trading prices, suggesting a potential rise.

Relative strength index scores

On May 7, NGD, AEM, SLW, and IAG had RSI scores of 50.7, 30.8, 45.9, and 58.0, respectively. The VanEck Vectors Gold Miners ETF (GDX) had an RSI score of 44.0. An RSI score above 70.0 suggests an impending downward price correction, while a score below 30.0 indicates an upward price correction.

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