In this article, we’ll take a look at senior gold miners’ technical indicators.
Moving averages help traders and investors make market entry or exit decisions. Usually, if a stock is trading below its moving averages, it indicates that the stock is oversold, and vice versa.
Gold miners’ moving averages
As we can see in the table above, among the gold miners we’re reviewing in this series, Goldcorp (GG) and Kinross Gold (KGC) are trading at discounts to their 50-day moving averages based on their closing prices on November 21. Kinross Gold (KGC) is trading at a discount of 2.6% to its 50-day moving average, while Goldcorp is trading at a 1.8% discount.
Extremely oversold position
Usually, an RSI (relative strength index) of 70 or higher is associated with an overbought level. An RSI of 30 or lower indicates that an asset may be oversold and could become undervalued.
The gold miners under review in this series aren’t trading at any extremes. Kinross Gold could, however, be fast approaching the RSI of 30, which indicates an oversold position.
The SPDR Gold Shares ETF (GLD) and the VanEck Vectors Gold Miners ETF (GDX) are trading at 14-day RSI levels of 42.6 and 54.0, respectively. While they’re currently not in the oversold territory, any major pressure from the strength in the US dollar could push them into an oversold position. Such an oversold situation usually means that a bounce is around the corner, but investors should note that assets could remain oversold or overbought for an extended period of time.
Having considered the technical parameters for gold miners, let’s conclude this series by looking at gold’s fundamental valuation and determining its potential upside or downside.