Ongoing pullback in gold leaves gold miners undaunted
The continuing retracement in gold after its recent decade-high presents some interesting opportunities for gold miners.
Gold’s recent rally has seen some weakness, but this is likely to be a buying opportunity in due course. While we wait for the expected recovery in gold prices, it is time to look at a gold miner ETF, and UK-listed gold producers.
VanEck Vectors Gold Miners ETF
Loose monetary policy and negative real interest rates, plus the uncertainty surrounding the global economy due to the Covid-19 pandemic all mean that gold has been in high demand. Gold miners provide another way to take advantage of the rise in gold prices, with the gold miner ETF providing a focus on these firms.
The VanEck Vectors Gold Miners ETF US (24 Hours) declined 50% in February and March, but like gold itself it has recovered impressively. Since April we have seen the uptrend revived, with a pullback in mid-June creating a higher low. Since then the price has remained solidly above the 50-day SMA, and while it has eased off the August high, the uptrend is intact.
Fresnillo
The Mexican miner of gold and silver Fresnillo PLC has seen a huge rebound since March, putting an end to a three-year downtrend. The price continues to edge back from its August peak above £13, but with the rally still in place traders should be looking for bullish developments such as stochastic and MACD crossovers, or an end to the recent run of intraday lower highs.
Centamin
Here too the trend is still firmly higher Indeed, we may be seeing Centamin PLC recover from 200p, potentially marking another turn higher and a higher low. Potential support in any bigger downward move would be at 191p, the 50-day SMA, or 170p, the 100-day, or 143p, the June higher low.
Petropavlovsk
Shares in Petropavlovsk PLC had been rallying since December last year and suffered a much smaller downturn in February and March compared to other gold miners, and indeed to the broader market. Dips to, or just below, the 50-day SMA have provided strong buying opportunities, and the recent pullback towards 30p already appears to be resolving into a fresh move higher.
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