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Centamin Shares Break Out of Trading Range as Competition Heats Up in Egypt

Simon Mugo trader
Updated 29 Apr 2021

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Shares of Egypt’s leading gold producer Centamin PLC (LON: CEY) have broken out of the trading range highlighted in a previous article and are about to retest the previous resistance now turned support level.

The miner’s prospects appear very promising under Egypt’s new mining rules targeted and attracting new investments in the mining sector given the country’s vast mineral resources.

Centamin operates Egypt’s sole gold mine, the Sukari mine, and has been facing significant challenges. Some parts remain very unstable, triggering several shutdowns at the mine due to safety concerns and technical challenges.

The company will also benefit from the projected rally in gold prices driven by the rising global inflation as Central Banks print more money to combat the slower economic growth triggered by the coronavirus pandemic.

Centamin will now face competition in Egypt, given the award of 82 gold exploration block awards to 11 mining companies who will compete with the firm if they discover gold in the country and start mining operations.

The company’s shares could rally higher if the support level holds and buyers step in to push prices higher.

It seems like institutional investors are aware of the changing tide at Centamin, as evidenced by WorldQuant LLC’s actions. The hedge fund recently reduced its short interest in Centamin from a high of 0.63% on March 31 to its current position of 0.52%.

Institutional investors are regarded as the ‘smart money,’ which is why retail traders should pay attention to WorldQuant’s reduced short interest. It appears the fund expects Centamin shares to keep rising.

Bullish traders could find Centamin’s current share price quite attractive. However, nothing is guaranteed in the markets.*

*This is not investment advice.

Centamin share price.

IG chart of Centamin share price 28-04-2021

Centamin shares have broken out of the recent trading range and appear set to keep rising if support holds.

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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading