Gold has reached a new historical high! Can Newmont's Target Price keep up? (2024.07.17)

Hello everyone, this week's 【Technical Tracking】 will analyze the world's largest Gold producer—Newmont ($Newmont(NEM.US)$）。

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On July 16, 2024, stimulated by multiple Bullish factors, Gold prices surged nearly 2%, reaching an all-time high!

Gold has suddenly strengthened, not only breaking the previous high volatility that lasted for three months but also sparking market speculation about further increases in Gold prices. The main reason behind this is that a series of recently released economic data from the United States has strengthened confidence in the Federal Reserve's control over inflation, leading to rampant speculation of interest rate cuts in the market.

CME data shows that as of July 17, the market bets on the probability of the Federal Reserve cutting interest rates in September exceeding 93%, which is almost a certain forecast for a rate cut. A month ago, the probability of betting on a rate cut in September was less than 60%.

Interest rate cuts usually benefit low or zero-interest Assets, and Gold along with Gold-related stocks are the obvious beneficiaries. As the world's largest Gold producer, Newmont has performed well in this trend of rising Gold prices. In the past month, Newmont's stock price has increased by 18%, far exceeding the S&P 500 Index's 3% increase during the same period.

Newmont's main competitors include Barrick Gold (GOLD) and Agnico Eagle (AEM). Compared to its competitors, Newmont has more substantial Gold mineral reserves. Data shows that Barrick Gold has Gold reserves of 77 million ounces, and Agnico Eagle has 53.8 million ounces, which together only amount to the Gold reserves of Newmont. In the long run, this could imply that Newmont has greater growth potential.

Technical Analysis

Trend analysis:

The weekly chart shows that over the past two years, Newmont's stock price has experienced a prolonged decline, mainly due to the company's performance falling into losses. Although during this period, Gold prices have repeatedly broken historical highs, Newmont is still far from recovering.

Looking at the daily chart, there are some positive signals. Since hitting a four-year low of $29 at the end of February, Newmont's stock price has rebounded over 60% and has broken through the rectangular consolidation Range that had been maintained for more than two months, indicating the possibility of a new round of upward space.

Indicators interpretation:

● Newmont's stock price has clearly deviated from major moving averages, such as the 20-day moving average and the 50-day moving average, highlighting an extremely strong short-term trend.

● Although the stock price has broken through the rectangular Range, it has not been accompanied by a significant increase in Volume; on the contrary, recent Volume has remained relatively unchanged, suggesting that the Bid is relatively moderate.

● The RSI Indicators and KDJ Indicators have been in the oversold area for several consecutive days, indicating that the stock price may face potential adjustments in the short term.

The Candlestick chart showed a "Shooting Star" pattern on the last trading day, which also hints at a weakening Bid.

Focus direction:

Newmont's stock price is currently at a 52-week high, with no obvious resistance levels above, which is Bullish. However, considering the recent significant increase in stock price, investors may need to watch for potential adjustments.

On one hand, after the stock price broke through the rectangular Range, using the minimum Target Price = breakout point + rectangle height to calculate, it has already reached the approximate Target Price.

On the other hand, since the RSI and KDJ Indicators have shown overbought for several consecutive days, while the Volume has not increased substantially, it indicates a relatively cautious Bid, which may limit the stock price's further upward momentum in the short term.

This content discusses technical analysis; other methods, including Fundamental Analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results.

All investments involve risks, including the potential loss of principal, and there is no guarantee that any investment strategy will be successful.