Barrick Gold Corporation (GOLD) opened about 1% less despite releasing better-than-expected financial results in the fourth quarter.
Key points to remember
- Barrick Gold opened lower in Thursday’s session, despite better-than-expected fourth quarter financial results.
- Gold prices were subdued in 2021 due to a combination of weak central bank demand, slow jewelry sales, and lack of investor interest.
- The stock entered oversold territory looking at the Relative Strength Index (RSI), but the medium term trend remains bearish.
The company reported fourth-quarter revenue that rose 13.9% to $ 3.28 billion, beating consensus estimates of $ 50 million, while non-GAAP profits hit 35 cents per share, beating consensus estimates of four cents. Free cash flow was $ 1.09 billion for the quarter, well above the $ 720.8 million forecast by analysts.
Gold prices have been weighed down by weak physical demand and lack of investor interest, according to Bank of America. While the precious metal rose more than 20% last year, spot prices have fallen by around 6% so far in 2021. Inflation is generally a major driver for gold, but Nominal interest rates have remained within a narrow range.
Non-GAAP earnings are an alternative accounting method used to measure a company’s profits. Many companies report non-GAAP profits in addition to their profits based on generally accepted accounting principles (GAAP). These pro forma figures, which exclude “one-off” transactions, can sometimes provide a more accurate measure of a company’s financial performance from direct business transactions.
From a technical standpoint, the title has extended its losing streak since the start of the year. The RSI entered oversold territory with a reading of 26.83, but the moving average convergence divergence (MACD) remains in a downtrend. These indicators suggest that the stock could see some consolidation before going down.
Traders should watch for consolidation below trendline resistance at $ 22.00 over the next few sessions. If the stock breaks out of these levels, traders could see a movement towards reaction highs of around $ 25.00 or the 200 day moving average at $ 25.87. If the stock extends its losses, traders could see a move towards Fibonacci support at $ 19.71.
The bottom line
Barrick Gold opened lower during Thursday’s session, despite posting better-than-expected fourth quarter results. Weak gold prices were the driving force behind the stock’s weak performance in 2021, but with an oversold RSI traders could see near-term consolidation before its downtrend resumes.
The author does not hold any position in the mentioned stocks, except through passively managed index funds.
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