Gold Fields Limited (JSE: GFI) enjoyed a golden week last week, rallying close to 16%, benefitting from gold reaching a new all-time high. Several Federal Reserve speakers spoke with a dovish tone last week, bolstering the market’s bets that rate cuts are on the cards in the upcoming months, a positive sign for the non-yielding bullion. Jerome Powell confirmed this sentiment on Friday, acknowledging that the current monetary policy is slowing the economy as expected.
The market moved quickly to reprice its interest rate expectations for the upcoming month. The CME FedWatch Tool now hints at a 54% chance of a rate cut in March, a significant improvement from the 21% a week ago. As a result, the futures market now implies a 38% chance of two 25bps rate cuts by May, which indicates a strong shift in sentiment from the 9.6% probability a week ago. As we advance into the new week, all eyes will be focused on Friday’s Non-Farm Payroll (NFP) report to get additional insights into the state of the US labour market, which could trigger further repricing in the market, making it an intriguing session to close off the week.
Technical
On the 1D chart, the breakout from the descending channel has been sustained, with the share pricing pushing above the prior uptrend’s peak at R275.36. The shorter-term 25-SMA (green line) remains above the 50-SMA (blue line) and the 100-SMA (orange line), confirming the bullish presence in the market.
However, the RSI indicates overbought conditions, which could trigger a pullback in the price in the upcoming sessions. Support at R275.36 could be the first level of support if the pullback occurs before a retest of the 61.8% Fibonacci golden ratio becomes likely at R256.37. If the market fails to find buyers here, the Fibonacci midpoint at R250.39 provides strong support, backed by the 25-SMA, and could halt the selling momentum if a new downtrend emerges.
Alternatively, if the share price remains above R289.76, the current trend could continue. Resistance is established at R302.38 before the 161.8% Fibonacci extension comes into play at R307.02, where the buyers may need additional fundamental backing to push on.
Summary
With the gold spot price reaching new all-time highs, Gold Fields has been on the receiving end of some healthy bullish momentum. As we advance, R289.76 could be a crucial level to look out for. If the price fails to remain above this level, a pullback could occur toward R275.36 in the upcoming sessions.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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