Bulls Take A Hit: Barrick Gold Drops Below SMA(200)

Around two weeks ago, we painted quite a bullish picture for Barrick Gold/ABX, mainly driven by the recent strong earnings report which was delivered to investors and after news made rounds in August, that Warren Buffett's Berkshire Hathaway had built a position of a little greater than half a billion USD in the company.

What could possibly go wrong for bulls? Well, when looking at the ABX chart on a daily time-frame it seems as if the answer is "quite a bit"…

Bulls take a hit: Barrick Gold drops below SMA(200)

What's up Barrick? After solid earnings, drop to below the SMA(200)

We pointed out in our latest research piece on Barrick Gold that the stock gave back most of its post-earnings-release gains on Monday, the 09th after news hit the wire that Pfizer/BioNTech are on their way to a Covid-19 vaccine said to be effective in over 90% of cases. Today, the stock hasn't yet recovered, and has instead broken below its SMA(200) line – an overall negative sign for bulls

Technically speaking, the sustainable break below 26.00 USD is also price-action-wise a bearish sign, even though optimists will certainly argue that only a break below 22.15, the June lows, would negate the sequence of higher highs and higher lows.

Now, the big "BUT": there is a strong positive correlation from Gold and ABX over the last 500 trading days. The yellow metal is currently looking into the "abyss". With a break below 1,850 USD making further losses down to 1,750/760 USD a serious option, a quick and accelerated push down to 22.15 USD in ABX also becomes a serious option.

That said, we'd certainly want to become a little more defensive in painting a bullish picture for the Barrick Gold stock.

Still, the picture is not as dark as it may currently seem in our opinion:

  • Last week, on Monday the 16th, Moderna announced that the phase 3 study met statistical criteria with a vaccine efficacy of 94.5% (P < 0.0001) and announced a longer shelf life for its COVID-19 vaccine candidate at refrigerated temperatures
  • The yellow metal initially sold off (the stock market hadn't opened when the news hit the wire, so ABX was officially not affected by the bearish Gold price action)
  • It quickly recovered its daily losses, closing the day nearly unchanged
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