Newmont Corporation (NYSE: NEM) experienced notable upward momentum in its stock price on Monday, coinciding with a substantial rise in precious metals values. This movement was primarily triggered by the announcement that the U.S. Department of Justice has initiated a criminal investigation into Federal Reserve Chair Jerome Powell. The resulting market dynamics exhibited heightened investor caution and a pivot toward traditionally secure assets such as gold and silver.
The revelation of the federal inquiry has exerted downward pressure on the U.S. dollar, igniting fresh apprehension regarding the autonomy of the Federal Reserve. These concerns led market participants to withdraw from U.S. dollar-denominated assets, further accelerating the precious metals rally.
Gold, in particular, reached unprecedented levels. On Wednesday, it soared by 2.4% to a historic peak of $4,619 per ounce, surpassing the $4,600 mark for the first time on record. This surge comes amidst the dollar's sustained depreciation following the unexpected disclosure of the criminal investigation involving Powell.
Market analyst Fawad Razaqzada from FOREX.com attributed the gold price escalation to this investigation news, highlighting that "the main catalyst behind today’s move has been a surprise announcement that federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell." He further emphasized the resulting unease about the Federal Reserve's independence, which nudged investors toward conventional safe havens such as gold and silver.
While the current market reaction has propelled precious metals to new highs, Razaqzada cautioned that if concerns regarding Federal Reserve independence were to dissipate quickly, dollar value might stabilize, potentially exerting downward pressure on gold prices in the short term.
Technical Analysis Suggests Strong Uptrend for Newmont Stock
Newmont's share price currently demonstrates compelling bullish characteristics. As it trades significantly above its primary moving averages, the stock reveals a solid upward trajectory. Specifically, it stands approximately 10% higher than its 20-day simple moving average (SMA), 21.1% above the 50-day SMA, and markedly 57.2% over the 200-day SMA. These measures collectively indicate robust momentum favoring continued price gains.
The Relative Strength Index (RSI) for Newmont is presently at 66.02. This reading falls within the neutral range but approaches the threshold typically associated with overbought conditions, signaling potential for cautious trading as momentum might be nearing a peak that could invite a pullback.
Additionally, the Moving Average Convergence Divergence (MACD) indicator remains elevated above its signal line, reinforcing the current bullish momentum. Traders interpreting this signal might anticipate a continuation of the present uptrend in the near term.
Support for the stock is identified near the $97.50 level, which could serve as a focal point if prices experience declines. At this moment, no distinct resistance threshold has been established, leaving upward movement prospects relatively open. If Newmont shares test the noted support, it may represent an inflection point to reassess trend durability.
Earlier this year in April, Newmont witnessed a technical milestone with the occurrence of a "golden cross," when the 50-day SMA traversed above the longer-term 200-day SMA. This crossover is widely regarded as a bullish signal, often preceding extended positive performance, aligning with Newmont's ongoing price developments.
Over the preceding twelve-month timeframe, Newmont's shares have recorded a remarkable 188.77% appreciation. This substantial growth attests to the company's strong market performance and underlines sustained investor interest.
Current Market Performance and Outlook
At the time of reporting on Monday, Newmont's shares were trading at approximately $112.68, reflecting a 3.39% daily increase. This price marks a new 52-week high for the stock, underlining bullish sentiment among investors and an optimistic evaluation of Newmont's prospects within the precious metals sector.
Key Points:
- A criminal investigation into Federal Reserve Chair Jerome Powell has unsettled markets, prompting a shift towards safe-haven assets like gold and silver.
- Gold prices have hit record highs, with significant implications for companies operating in the precious metals mining space, including Newmont.
- Technical indicators for Newmont stock exhibit strong bullish momentum, reinforced by recent moving average crossovers and momentum metrics.
- Despite strong gains, caution is warranted as certain technical measures approach levels that may foreshadow near-term pullbacks.
Risks and Uncertainties:
- The ongoing federal investigation into Federal Reserve Chair Jerome Powell introduces considerable uncertainty concerning monetary policy independence and market stability.
- The U.S. dollar's performance remains volatile, influencing precious metals prices and consequently impacting Newmont's stock valuation.
- If concerns about the Fed's autonomy diminish rapidly, dollar strength may return, placing downward pressure on gold prices and related equities.
- Technical indicators such as RSI nearing overbought zones suggest potential for short-term corrections despite the prevailing uptrend.