Gold Miners On ASX Slide Below Short-Term Trendlines

  • Mar 22, 2019 AEDT
  • Team Kalkine
Gold Miners On ASX Slide Below Short-Term Trendlines

Gold prices plunged in the international market, with COMEX gold future declining from the level of $1320.20 (Day’s high on 21st March 2019) to end the day on a negative note at $1307.30. The fall in gold prices was attributed to the signs on betterment in the U.S. economic conditions. As the United States of America is among the top economy of the world, the market and economic condition of the country is considered as an indicator to reckon the global economy.

The U.S. data revealed on 21st March 2019, brought optimism back in the market over the improving economic conditions and in turn exerted pressure on gold prices. The U.S. Philly Fed Manufacturing (PMI) Index, an economic indicator from the Federal Reserve Bank of Philadelphia, surged significantly to the level of 13.7 for March 2019, as compared to the market expectation of just 4.6.

The significant rise in the PMI for March puts emphasis on the improvement in the US business activity and in turn represents a healthy economic environment. Another data which exerted the pressure on gold prices and supported the view of the betterment in economic condition was the U.S. Weekly Unemployment claims. The Unemployment claims for the week ended 15th March declined to 221K as compared to the market expectation of 226K and previous 230k, which signifies the improvement in labor market and in turn exerted the pressure on gold prices.

The improvement in labor market and the increased business activity which generates more employment supported the dollar prices, and dollar index (DXY) surged from the level of 95.74 (day’s low on 20th March) to the level of 96.62 (day’s high on 21st March).  The high dollar prices forced the market participants to sell the dollar-dominated asset to reduce the price risk and exerted pressure on gold prices.

The stocks of many gold miners on Australian Stock Exchange plunged. The miner such as Regis, Evolution, St Barbara, etc. all closed on a negative note.

Evolution Mining (ASX: EVN):

Source: Thomson Reuters: EVN Daily Chart

Source: Thomson Reuters: EVN Daily Chart

The prices of Evolution plunged and broke a short term trendline and closed below it as can be seen on the charts. The 7-days Exponential Moving Average (EMA) valued at A$3.665 is above 20-days EMA value at A$3.645. The Relative Strength Index (RSI) of 14-days is placed at 49.95, which is slightly below its mean value of 50.

St Barbara (SBM):

 Source: Thomson Reuters: SBM Daily Chart

 Source: Thomson Reuters: SBM Daily Chart

The stock prices of the company plunged significantly and ended the session with a bear engulfing daily candle. The prices broke the short-term trend line and dropped significantly. The 7-days EMA valued at A$4.244 is below the 20-days EMA valued at A$4.428. The short-term moving average crosses the long term 200-days EMA valued at A$4.357. The Relative Strength Index (RSI) of 14-days period is valued at 21.97 significantly below its mean value of 50.

Regis Resources Limited (ASX: RRL)

Source: Thomson Reuters: RRL Daily Chart

Source: Thomson Reuters: RRL Daily Chart

The Stock prices broke the short-term trendline and dropped to close below the trendline. The 7-days EMA valued at A$5.353 is below the 20-days EMA valued at A$5.360. The Exponential moving averages are making a dead-cross on the daily chart. The Relative Strength Index (RSI) of 14-days period is valued at 45.122 below its mean value of 50.


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