Will Gold Get A Lift From The FOMC?

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The Price of Spot Gold slipped to a 3-week low of $1309.00 as the inverse correlation to the USD strength continues to influence price flows.

By the NY close, the yellow metal had found buyers into the weekend to settle at $1314.00.

With the FOMC expected to raise the FED Funds target on March 22nd, market commentators have noted that the price of Gold has rallied  after the last 5 rates hikes in this cycle.

As illustrated in the chart below, Spot Gold traded at $1240 when the FOMC last raised rates on December 13th. By January 25th, Gold had rallied almost 10% to reach $1350.

Some of the local mining names we are following into the buy zone include NCM, EVN, SBM and SAR.

In addition, investors looking for a “pure play” on Spot Gold can buy the BetaShare Gold ETF with the symbol: QAU

Spot Gold

BetaShare Gold ETF: QAU

 

NCM Under Pressure After Cadia Dam Failure

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Shares of NCM have dropped over 5% in early trade reaching an 8-month low of $20.30.

The selling pressure is in response to the weekend news that the Cadia mine west of Sydney has been closed due to a failure of an embankment at a tailings storage area.

Initial investigations suggest the break in the wall is related to 2 local tremors, of 2.7 magnitude, which struck the region on Friday.

 NCM officials have released a statement today saying that no tailings will reach the local environment, but that 2018 production guidance could be impacted.

Based on the information disclosed so far, we don’t expect a protracted production halt at Cadia like after the seismic event in April of last year.

As such, we believe that increased production efficiency at the Lahir mines in PNG combined with an upward trajectory in Spot Gold prices will see NCM shares stabilize above the $20.00 support level.

NCM is part of our ASX Top 50 model portfolio and we believe adding to long positions in the $20.40 area is a reasonable strategy.

Newcrest Mining

 

 

 

Newcrest Firms As Spot Gold Continues to Climb

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As global markets become more concerned about the impact of US tariffs and the escalation of trade disputes, the price of Spot Gold has firmed back to the $1340 level in late NY trade.

Our preferred local gold stock to buy is Newcrest, which has recovered smartly from the $21.20 low last week to reach $22.20 in early trade today.

The correlation between Spot Gold and NCM has been around 70% over the last 6-months.

As such, we would expect a break of the $1350 level in the spot price to correspond to just under $23.00 for NCM.

Newcrest was added to our Top 50 Model portfolio on December 13th at $22.10.

Newcrest Mining

 

Newcrest Is Approaching The Buy Zone

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Shares of NCM are down over 2% in early trade as Spot Gold prices traded 1% lower to $1317.00 in the NY session.

Selling in Spot Gold was triggered by comments from new FED chief Jerome Powell who said that the US central bank could lift rates up to 4 time during 2018.

We added NCM to our model portfolio on December 13th at $22.10.

Technical indicators suggest  solid support levels in the $20.80/90 area.

We estimate that price in NCM will correspond to Spot Gold near $1300.00 per ounce and will look to enter long positions near $20.80.

Newcrest Mining

 

 

 

 

 

NCM Down 3% On Dismal Earnings Report

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Shares Newcrest have dropped over 3% in early trade as their half-yearly results disappointed the market.

The mining giant announced that revenue was down 5% to $1.7 billion, EBIT fell 50% to $230 million and free cash flow was reduced by 48% to $134 million.

As awful as these headlines appear, there were some bright spots.

The balance sheet improved compared to June 2017 with cash equivalents increasing to $556 million from $492 million.

Net debt improved to $1.436 billion from $1.499 billion, with their net gearing reduced from 16.6% to 15.9%.

 

A dividend of USD 7.5 cents per share was declared with the report, which will be paid to shareholders on May 2nd.

NCM was added to the Top 50 Model Portfolio on December 13th at $22.10.

We will look to add NCM to client portfolios on a pull back below the $22.00 level.

Newcrest Mining

 

Newcrest Mining Is Approaching The Buy Zone

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The price of Spot Gold has dropped over $40.00 since last Friday.

As a result, shares of Newcrest mining have fallen close to $2.00 and posted a 4-month low of $21.20 earlier today.

We expect good support in the spot Gold market near the $1300.00 area.

This roughly pencils out to the $20.80 level for NCM shares.

We suggest keeping NCM, as well as the smaller Gold producers, on the radar for a buying opportunity if spot Gold holds the $1300.00 level over the next few trading sessions.

Newcrest Mining

Newcrest Posts Steady Q2 Production

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The production numbers announced by NCM were broadly inline with market expectations and the correlation with Spot Gold remains intact.

The mining giant reported Q2 gold production of 613,000 ounces, which is a 17% increase quarter-on-quarter. The cost of production slipped slightly to US 830.00 per ounce.

We added NCM to our Top 50 Model Portfolio on December 13th at $22.10.

Technically, the share price remains tightly correlated to the price of Spot Gold.

As such, we estimate that investors will be able to buy NCM at $22.00 if the price of Spot Gold drifts back to $1320.00

Newcrest Mining

Spot Gold

Gold Slips Lower In Brisk NY Trade

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After posting a 5-month low of $1238 on December 12th, Gold prices rallied over $100 to peak at $1345 on January 15th.

The yellow metal traded as low as $1324 in yesterday’s New York session, which suggests the technical correction is likely to extend the downside range.

We see the next significant chart point at $1309 but wouldn’t rule out a test of the $1292 area over the near-term.

On a longer-term horizon, we are bullish on Gold and will look to buy shares in the domestic Gold producers at lower levels.

On January 4th, we flagged the potential for a bearish correction and suggested that investors take profits in Newcrest mining near the $23.30 area.

NCN reports its Quarterly Production numbers on January 30th. It’s reasonable to expect shares of NCM, as well as the smaller producers, to closely follow the spot price of Gold into these production reports.

We added NCM to our ASX Top 50 model portfolio on December 13th at $22.10. We will look to buy back into the sector as the correction in spot Gold runs its course.

Newcrest mining

 

 

 

Gold Rally Capped By FED Minutes

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Spot Gold prices reversed off a 4-month high of $1232 as the FOMC minutes suggested that the US FED is prepared to lift overnight rates up to 5 times in 2018.

The yellow metal has rallied over $80.00 over the last 3 weeks and has gained in 14 of the last 16 trading sessions. The internal momentum indicators are now in “overbought” territory which warns of a downside correction.

Much of the recent rally was supported by the notion that the FED would take a less aggressive monetary posture, which would weaken the US Dollar.

We maintain a bullish outlook for Gold but would look for a pullback to re-enter into long positions.

As such, we suggest taking profits in NCM in the $23.20 area and look to buy back at or near the $22.60 level.

Newcrest Mining