GDX – Gold ETF

The below post is a copy of a publication on the 18th of October. Since making the post, gold stocks have performed well and we now look to trim the gains and rotate into oversold industrial & REIT names.

Vaneck Vectors Gold Miners  is under Algo Engine buy conditions following the entry condition earlier this year at $30. It is a current holding in our ALL ASX ETF model portfolio.

GDX ETF has corrected from $45 to $38 over the past 8 weeks. We feel buying support will now begin to increase.

Individual names are also now appearing on the radar, such as Newcrest Mining Northern Star Resources, Evolution Mining, OceanaGold and Gold Road Resources.


OceanaGold – Algo Buy Signal

OceanaGold is under Algo Engine buy conditions and is seeing increased buying interest as the stock rallies from the $3.90 support level.

Gold prices hit a three-month high this month as investors flee to the safe-haven bullion amid escalated trade tensions and lower global interest rates.  Additionally, if we see the US dollar weaken, gold will appreciate as it becomes cheaper for investors holding other currencies. 

Buy OceanaGold and look for a rally to $4.50+

Gold Stocks in Review

Gold has sold off in recent trading sessions, following the strength in the US dollar. The sell off has now created Algo Engine buy conditions in Evolution Mining, St Barbara, OceanaGold  & Northern Star Resources, all of which are current holdings in the ASX 100 model.

Newcrest Mining is still in the early  stages of forming a higher low and may take another few days before  we see an Algo Engine buy signal appear.

Has Spot Gold Found A Near-Term Low?

After reaching an intra-day high just under $1370.00 in mid-April, the price of Spot Gold has dropped over 12% and matched a 1-year low of $1210.00 last week.

The recent strength in the USD, weakness in the Yuan and uncertainty over global trade tariffs are some the reasons used to explain the slide in the yellow metal over the last 2 months.

What is clear is that the technical picture in Gold is deeply oversold and due for a material correction higher.

As illustrated in the chart below, the last 8 times that Gold fell more than $90.00 over a 3-month period, the rally that followed averaged close to $150.00, or just under 13%.

Despite the recent weakness in Spot Gold, local Gold miners have performed reasonable well and have expanded production both domestically and abroad.

Our ALGO engine is now showing buy signals for NCM, SBM, NST, OGC, SAR and EVN.  

In addition, NST, EVN and NCM are included in our ASX Top 100 model portfolio.

We currently see the $1235.00 area in Spot Gold as an inflexion point which could drive the price higher and would be a net positive for these local Gold names.


ALGO Buy Signal In OceanaGold

After posting a 2-year high at $1370 in early April, the price of Spot Gold has dropped over 6% and made an intra-day low of $1281 during Monday’s trade.

The yellow metal has now firmed into the $1295 area and looks set to trade back over $1300 over the near-term.

Our ALGO engine triggered a buy signal in  OGC into yesterday’s ASX close at $3.32.

In addition to the recent slide in Spot Gold, shares of OGC have been pressured lower after its Q1 update showed that production and sales were both lower due to severely cold weather at its Haile Mine in the USA.

The daily charts show solid support in the $3.10 area and we see scope for a move back over $3.65 as the spot Gold price moves higher.



Take Profits In Newcrest Mining

On August 8th, Spot Gold posted a low during the New York session of $1254.00.

Overnight, the yellow metal posted a 10-month high of $1341.00, a 7% gain in less than a month.

Over the same period of time, Newcrest mining has rallied from $20.25 to post a high of $23.70 early in yesterday’s session. This move represents a bit less than a 17% gain.

Even though the heighten geopolitical tensions which have supported the Gold price are still very much a part of the market, technical momentum indicators are signalling that investors can expect a short-term correction lower.

We believe the medium-term price trajectory in Gold will remain intact after the overbought conditions are alleviated.

As such, we suggest taking profits today in NCM, along with the smaller Gold miners: EVN, SAR, NST and OGC.