Gold miners under pressure from declining gold prices

Gold prices have fallen close to 6% over the past week

Gold prices have fallen to its six-week low, on the back of a surge in US dollar after the Federal Reserve signalled it might raise interest rates sooner than expected. This has led to broad-based weakness across the gold mining stocks, with the iShares MSCI Global Gold Miners ETF declining by 10.4% over the past week.

Near-term, the performance of gold miners will continue to depend on the dynamics of gold prices movement. Considering that the US ten-year Treasury yields have declined over the past two trading days after its initial surge, one to watch if gold prices are able to stabilise at current levels for the upcoming week.

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Here are some of the gold mining companies listed in the US which investors may look out for:

Barrick Gold (NYSE: GOLD)

Barrick Gold Corp's share prices may be more sensitive to changes in gold prices, with its gold segment accounting for close to 95% of total revenue. The company recently guided for higher production volume in 2H 2021 on various projects ramp-up and gold prices will remain a key catalyst in determining revenue outperformance ahead.

Barrick Gold’s share prices have been extended to the downside over the past week, with a bearish gap down last week on high volume. An attempt to hold above its 100-day MA previously was met with resistance around the US$22.00 level, which will remain a key level to overcome ahead.

Prices are currently attempting to find support at an upward trendline, where prices saw a rebound on previous three occasions, with the RSI indicating oversold levels. If the trendline fails to hold, we may potentially see prices move lower to the US$19.00 resistance-turned-support level.

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Newmont Goldcorp (NYSE: NEM)

Newmont Mining Corp is also largely exposed to gold prices, with its gold segment accounting for 90% of total revenue. Its EBITDA margin has largely trended below its peers on a five-year average and a weak environment for gold prices may provide further headwinds for its margins.

Newmont Goldcorp’s shares came under pressure last week, with an unsuccessful attempt to hold above the 100-day MA. The MACD indicator displayed a bearish crossover in June, with recent downside action breaking below an upward trendline formed since March.

Near-term resistance level may remain at the support-turned-resistance level of US$63.30, where prices were resisted on previous three occasions. Should prices continue lower, one may potentially find some support at the US$59.20 level.

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Freeport-McMoRan (NYSE: FCX)

Freeport-McMoRan Copper & Gold Inc may identify itself less as a gold mining company, being known more for its role as a major copper producer. The recent weakness in copper prices may also weigh on its share price, with one to watch for signs of prices stabilisation for a potential short-term rebound. Longer-term catalyst for the company may include the US infrastructure spending plan, potentially boosting US domestic sales which accounts for 37% of its total revenue.

From its technicals, Freeport-McMoRan’s share prices failed to push higher at the start of the month, after being resisted at the US$44.64 level for the third time. Recent downside action was met with a surge in volume, suggesting that the shift in sentiments were significant. This also marks a break below a longer-term uptrend line which has been supporting prices on previous four occasions.

Near-term resistance may be at the US$36.40 region, where the 100-day MA coincides with the support-turned-resistance upward trendline. Near-term support may be at the US$32.15 level.

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