In the three weeks leading up to December, Harmony Gold Mining Company Limited (JSE: HAR) experienced impressive gains of 19%, 9%, and 8%. This surge coincided with a momentary peak in the gold spot price, reaching historic highs. The driving force behind this upward momentum was the growing speculation that the Federal Reserve has completed its cycle of rate hikes, with potential rate cuts on the horizon in the coming months. Supporting this sentiment, the ADP Employment Change report revealed a figure of 103K, falling below the 130K consensus.
The allure of non-yielding gold intensified as the prospect of lower market rates gained traction. However, the upcoming Non-Farm Payroll (NFP) report is poised to play a pivotal role in shaping market sentiment regarding the Federal Reserve’s stance on interest rates. As we approach Friday’s session, anticipation is high, marking it a crucial day in the market landscape.
Technical
On the 1W chart, an ascending channel experienced a breakout in recent weeks, confirmed by the 25-SMA (green line) trading above the longer-term 50-SMA (blue line) and 100-SMA (orange line). However, a technical correction is likely underway, with the price potentially retesting the breakout level of the channel in upcoming sessions.
If the NFP report is unfavourable for gold, the pullback could be sustained toward R100.22. At this level, the price could either pivot toward R115.10 or continue its descent within the channel at R91.79. Should the pivot occur, the price could exceed the R115.10 resistance toward R126.55 in the upcoming weeks.
However, failure to stay above R100.22 could see the channel pattern continue, with R91.79 acting as a last line of defence against the potential channel breakdown. A breakdown of this manner could lead the price toward R81.42 and R77.37, the Fibonacci midpoint from the current uptrend’s peak.
Summary
As the allure for gold increased amid a dovish repricing of interest rate expectations, Harmony Gold has been on a clear uptrend in recent weeks. While a pullback is underway, the Friday NFP report could reshape the future of the price, with support at R100.22 being a pivotal one to watch.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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