Will Gold Get Newmont Mines Going?
With gold – basis the SPDR Gold Trust (NYSE: GLD) – rallying to its highest levels in weeks, what are shares of Newmont Mining Corporation (NYSE: NEM) doing closing lower for a third day in a row and technically oversold?
The idea of the prices of gold bullion diverging the share prices of gold mining stocks is nothing new. Arguably one of the first things anyone learns when trading one or the other is that while the two often move in tandem, there are plenty of instances in which the bullion or the miners, outperformed the other for significant stretches of time. For example, from January through June of last year, the SPDR Gold Trust gained more than 4%, while the Market Vectors Gold Miners ETF (NYSE: GDX) fell by more than 12%.
But since gold topped in September, both the bullion and the miners have been on the same page, trading downward in a jagged zigzag of lower highs and lower lows. And even more recently, with the GLD gaining for a fifth day out of the past six, shares of widely-traded gold miners like Randgold Resources (NASDAQ: GOLD) and Anglogold Ashanti (NYSE: AU) were right on track: up 1% or more and trading at new short-term highs.
Except for Newmont.
Shares of NEM have traded lower for three days in a row to finish in oversold territory ahead of trading on Thursday. The selling in the stock was aggressive enough to take NEM below its 200-day moving average on an intraday basis, though the NEM managed to close off its lowest levels of the session. The last significant pullback in the stock was in mid-December, when a three-day sell-off took the stock into oversold territory for two days in a row, and higher by more than 2% five days later.
Newmont Mining Corporation has a short-term, positive edge of just over 1%. Despite this, the stock still has a neutral rating of 6 out of 10, after an intraday range on Wednesday from as low as 5 and as high as 7.
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David Penn is Editor in Chief of TradingMarkets.com