News of a political breakthrough for German Chancellor Angela Merkel has the U.S. dollar cooling against the euro. In turn, February gold futures are flirting with four-month highs, while a fresh round of bullish brokerage notes is also drawing attention to gold stocks. Among those in focus are Agnico Eagle Mines Ltd (NYSE:AEM), Barrick Gold Corp (NYSE:ABX), and Yamana Gold Inc. (NYSE:AUY). Here’s a closer look at how shares of AEM, ABX, and AUY are performing today.
Agnico Eagle Mines Stock a Top Pick at Desjardins Research
TD Securities boosted its price target on Agnico Eagle Mines stock to $55 from $53 — a nearly 19% premium to last night’s close at $46.30, and sitting in territory not charted since September 2016. The security was also named a 2018 top pick at Desjardins Research.
The upbeat analyst attention has the gold stock trading up 0.1% at $46.34. Since hitting a near-term low of $40.70, AEM shares have rallied roughly 14% — taking out recent resistance from their 200-day moving average along the way.
Nevertheless, options traders have been buying to open puts over calls at an extreme pace, albeit amid relatively low absolute volume. AEM stock’s 10-day put/call volume ratio of 2.94 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 100th annual percentile.
Barrick Gold Call Options Hot Amid Rebound
Barrick Gold stock saw its price target lifted to $17.50 from $17.00 at TD Securities, representing expected upside of 19.5% to Thursday’s close at $14.65. The bullish brokerage note is being well received, with ABX shares are up 0.6% to trade at $14.74.
Longer term, the security is down nearly 28% from its April high of $20.37. And while ABX stock has come off its Dec. 7 annual low of $13.28, it’s staring up at the $15 mark — home to its descending 80-day moving average, and a 23.6% Fibonacci retracement of the equity’s April-to-December retreat.
Options traders have remained unusually upbeat toward the gold shares in recent weeks, though. At the ISE, CBOE, and PHLX, ABX’s 10-day call/put volume ratio of 13.38 ranks in the 96th annual percentile, meaning calls have been bought to open over puts at a faster-than-usual clip.
Analyst: Yamana Gold Production Forecast Could Lift Investor Confidence
CIBC raised its price target on Yamana Gold to $3.75 from $3.25, with the brokerage firm saying the company’s stronger-than-expected fourth-quarter gold production estimates “bode well for market sentiment and investor confidence.” As such, AUY stock is up 1.2% to trade at $3.38.
After putting in an intermediate-term bottom at $2.40 in early December, the security has jumped almost 41% — and is on track for its highest close since mid-February. Part of this recent upside has likely been driven by short sellers, with short interest down 38.4% in the two most recent reporting periods to 17.58 million shares. It would take fewer than two sessions to cover these remaining bearish bets, suggesting this particular source of buying power is nearly exhausted.
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