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A technical outlook for gold and share price targets with broker ratings

In this article we take a technical view on both the dollar and rand price of gold, as well as look at broker ratings and price targets for local miners of the precious metal.

Dollar Gold – technical view

The medium to long term trend for gold remains sideways in nature, with a broad range considered between levels 1680 (support) and 1960 (resistance) respectively.

In the short term, gold has found support at the 1760 level. It is from this level we are seeing the precious metal attempting a rebound from oversold territory. The rebound at this stage has questionable momentum, but while 1760 holds as support 1830 is the upside resistance target.

Should the 1760 level fail to hold, 1725 becomes the initial support target favoured from the move.

ZAR Gold (Newgold Issuer) – Technical View

The above chart is that of exchange traded fund Newgold Issuer. Newgold tracks the rand price of 100th of a troy ounce of gold.

The Newgold price looks to have found support at the 26100 level. The price looks to be reversing off this support level and from oversold territory. The reversal places 27345 and 27620 as resistance targets from the move. Should the price instead move to close below the 26100 support level, the bullish indications would be deemed to have failed.

Gold share price targets and broker ratings

The table below shows locally listed gold counters, highlighting long term price targets and broker ratings as of the 13th of December 2021 and sourced from Refinitiv Workspace.

Company

LT Broker Rating

LT Target Price

Share Price

Discount/Premium to Target

AngloGold

HOLD

322.47

306.35

-5.00%

Gold Fields

BUY

166.25

160.31

-3.57%

Harmony

HOLD

56.85

59.17

4.08%

DRD Gold

HOLD

12.00

13.68

14.00%

Pan African Resources

BUY

27.66

15.72

-43.17%

The above table highlights that shares AngloGold Ashanti, Harmony and DRD Gold currently carry ‘hold’ ratings in terms of consensus long term analyst ratings, while Gold Fields and Pan African Resources have consensus ratings of ‘buy’.

Pan African Resources continues to trade at the deepest discount to a longer term price target, although it should be remembered that the smaller cap counter finds far less analyst coverage than its sector peers.

Harmony and DRD Gold currently see their respective share prices trading at a premium to long term analyst price targets.

AngloGold and Gold Fields trade at narrow discounts to long term analyst price targets.

In Summary:

  • Key levels for dollar denominated gold are 1760 (support) and 1830 (resistance)
  • The rand price of gold looks to be reversing from oversold territory
  • AngloGold, Harmony and DRD Gold carry long term analyst hold ratings
  • Gold Fields and Pan African Resources carry long term analyst buy ratings
  • DRD Gold and Harmony Gold trade at premiums to long term price targets

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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