Randgold Resources Is No Overnight Sensation

 | Aug 29, 2017 | 8:30 AM EDT
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Randgold Resources Ltd. ADRs  (GOLD) broke out on the upside yesterday as gold bullion crossed $1,300 per ounce. That may be the headline story but the back story began in early 2017 as prices have been creeping higher for months. Many investors view the gold mining companies as a some odd part of the stock market. They are kind-of interested in gold but they don't want to be labeled as a "gold bug" or worse.

With some investors wringing their hands over the actions by North Korea overnight a look at Randgold Resources could be useful now. Let's see what the charts and indicators suggest.

In this daily chart of GOLD, above, we can see that prices made a low in November/December as the broader equity market took off after the U.S. election. GOLD rallied to the end of February and then made a sideways consolidation pattern. In early January GOLD closed above the 50-day moving average line and the slope of the line turned up in late January. Prices traded above the 200-day line in February but those gains were not sustained. A bullish golden cross of these two averages occurs in May. Today GOLD is above both averages and both are rising -- a bullish setup.

The trend of the On-Balance-Volume (OBV) line is bullish and the line was positive when GOLD traded sideways for five months. A rising OBV line signals aggressive buying because the volume of trading is heavier on days when GOLD closes higher. The OBV line broke out of the upside earlier in August ahead of the price action.

The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish mode, rising and above the zero line.

In this weekly bar chart of GOLD, above, we can see that prices are above the rising 40-week average line. At $100, GOLD is set to move higher as there is little overhead chart resistance. The weekly OBV line is bullish as well as the weekly MACD oscillator. The current strength in this miner did not appear overnight but has been building up for months.

In this Point and Figure chart of GOLD, above, we can see that prices broke out on upside from an "ascending triple top" and there is a $118 price target.

Bottom line: Market observers who are short-sighted will try to make a case that gold and mining companies like GOLD are going up because of international events but the charts show a long period of accumulation ahead of these events. Trade GOLD from the long side looking for gains to $110 and then $118. A close back below $90 would upset the bulls and the charts too.

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