Barrick Gold (GOLD) Opens Lower Despite Strong Earnings

Barrick Gold (GOLD) Opens Lower Despite Strong Earnings

February 27, 2021

Barrick Gold Corporation (GOLD) opened about 1% lower despite reporting better-than-expected fourth quarter financial results.

Key Takeaways

  • Barrick Gold opened lower during Thursday's session despite reporting better-than-expected fourth quarter financial results.
  • Gold prices have been muted in 2021 due to a combination of weak central bank demand, slow jewelry sales, and a lack of investor interest.
  • The stock moved into oversold territory looking at the relative strength index (RSI), but the intermediate-term trend remains bearish.

The company reported fourth quarter revenue that rose 13.9% to $3.28 billion, beating consensus estimates by $50 million, while non-GAAP earnings came in at 35 cents per share, beating consensus estimates by four cents. Free cash flow came in at $1.09 billion for the quarter, which was well ahead of the $720.8 million that analysts forecast.

Gold prices have been weighed down by weak physical demand and a lack of investor interest, according to Bank of America. While the precious metal rose more than 20% last year, spot prices have fallen about 6% so far in 2021. Inflation is typically a major driving force for gold, but nominal interest rates have remained in a tight range.

Tip

Non-GAAP earnings are an alternative accounting method used to measure the earnings of a company. Many companies report non-GAAP earnings in addition to their earnings based on Generally Accepted Accounting Principles (GAAP). These pro forma figures, which exclude "one-time" transactions, can sometimes provide a more accurate measure of a company's financial performance from direct business operations.

TradingView.com

From a technical standpoint, the stock extended its losing streak since the beginning of the year. The RSI moved into oversold territory with a reading of 26.83, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock could see some consolidation before moving lower.

Traders should watch for consolidation below trendline resistance at $22.00 over the coming sessions. If the stock breaks out from those levels, traders could see a move toward reaction highs of around $25.00 or the 200-day moving average at $25.87. If the stock extends its losses, traders could see a move toward Fibonacci support at $19.71.

The Bottom Line

Barrick Gold opened lower during Thursday's session despite posting better-than-expected fourth quarter earnings. Weak gold prices have been the driving force behind the stock's weak 2021 performance, but with an oversold RSI, traders could see some near-term consolidation before its downtrend resumes.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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