This Gold Giant Is Fighting to Maintain Its Surge Higher

One of the biggest movers in 2024 has been gold.

The precious metal has rallied 21% since February and is currently trading around all-time highs.

But investors were initially hesitant to buy into gold stocks. That included the world’s largest gold producer, Newmont (NEM).

We checked in on NEM two months ago.

Back then, NEM was languishing around its lows. But it was setting up for a potential bounce.

That move has since played out.

So today, let’s look at NEM again to check out its prospects from here…

Down Move Accelerated

Take a look at the chart of NEM below. Its steady downtrend carried over into early this year.

NEM made a series of lower lows and lower highs. And the 50-day moving average (MA, blue line) trended lower. That’s a typical bearish pattern.

Newmont (NEM)

Source: eSignal

Within this bearish trend, there were several smaller swings.

These coincided with the 10-day MA (red line) crossing the 50-day MA back and forth. And the Relative Strength Index (RSI) zigzagged in between its upper and lower range (separated by the green line).

The last leg of NEM’s downtrend started with the RSI reversing from near overbought territory in late December.

That down move accelerated. And the RSI fell through support and into its lower band.

The blue moving average convergence/divergence (MACD) line also crossed beneath the orange signal line. Both then trended lower.

Plus, the 10-day MA crossed and accelerated below the 50-day MA. That pulled the 50-day MA lower too.

Then NEM’s downtrend faded out.

As NEM was making lower lows (upper orange line), the RSI made higher lows (lower orange line).

Take another look…

Newmont (NEM)

Source: eSignal

When buying momentum steadily increases like this, it will eventually push a stock price higher. That’s what we saw.

NEM rallied… but then stalled. That’s when we looked at NEM on March 22 (red arrow).

For that uptrend to resume, the RSI needed to rally off support (green line).

We also watched for the 10-day MA to accelerate above the 50-day MA, along with the MACD rolling higher.

That surge is now pushing the RSI into overbought territory. So what should we look for next?

Watch for Reversals

Just because the RSI is in overbought territory doesn’t mean the rally is coming to an end. The RSI can track in this upper area for extended periods when a stock is rallying.

But we do need to watch out for any reversals along the way…

The RSI reversed sharply twice in April (at “1” and “2” in the chart). If that happens again, it could lead to a sell-off.

We’d need to see the RSI fall back into its lower range (below the green line) and remain there as evidence of a downtrend.

The MACD is currently flatlining. So it would also need to reverse strongly. If it falls back toward the zero (0.00) line, it would be further proof of a down move.

Beyond that, I’ll also watch the MAs, which are still showing positive signals for now.

For any pullback to gather momentum, the 10-day MA would need to roll over and eventually cross below the longer-term 50-day MA.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict