Amidst a fluctuating environment of operational hurdles and increased costs, Gold Fields Limited (JSE: GFI) unveiled its recent quarterly operational update, attempting a pivotal turnaround after a three-week descent. In the third quarter, concluding on September 30, 2023, the gold mining titan witnessed a slight dip in gold production, a 6% decrease from the preceding quarter’s 577,000 ounces to 542,000 ounces. Operational challenges and mounting costs persisted, evident in the 8% rise of its all-in-sustaining costs to $1,381 per ounce.
However, steadfast in the face of adversity, the company upheld its annual production and cost objectives. Foreseeing a production target ranging between 2.25M ounces and 2.30M ounces, Gold Fields Limited aims to navigate the forthcoming challenges while anticipating all-in costs (AIC) to fall between $1,480 per ounce and $1,520 per ounce.
While the share price is down around 2.4% on Thursday, some tailwinds could boost the company’s operations. Recently, the US reported a slowdown in inflation, which bolstered bets that the Federal Reserve may be done hiking interest rates for the year. As the US dollar took a dip, the gold price saw a welcome ascent, potentially boosting the company’s prospects in the coming months.
Technical
On the 1D chart, a descending channel has formed, with the price crossing below the 50-SMA (blue line) toward the 61.8% Fibonacci retracement golden ratio at R227.07. However, with a long wick to the downside on the current day’s candle, the selling pressure seems to be fading, potentially signalling a reversal in the current trend.
A change in polarity has resulted in the prior support at R235.67 (S1), now acting as resistance to the share price’s ascent. Should the price sustainably clear this level in the upcoming session, the 50-SMA could be a significant hurdle at the point where it converges with the dynamic resistance of the channel close to R239.46. A breakout above this psychological resistance could trigger a bullish run, bringing higher resistance at R242.71 into the equation at the daily pivot point.
However, should the price remain below S1 on Thursday, the current reversal could wane. In this case, a pullback toward R229.82 and R227.02 could occur, with lower support established at R216.09 if the current downtrend persists in the upcoming sessions.
Summary
Gold Fields has faced a challenging operational environment, as highlighted in its recent quarterly operational update. However, investors reacted favourably to the company’s announcement of maintaining its production targets in the face of adversity. With a lot of volatility inherent in the Thursday session, the resistance at R235.67 could be crucial in determining whether a trend reversal will occur.
Sources: Koyfin, Tradingview, Gold Fields Limited
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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