gold prices
Fresnillo share price has had a successful year. It has gained by more than 96% this year, becoming the second-best performer in the FTSE 100 after the Scottish Mortgage Investment Trust whose shares have risen by 107%. Similarly, Polymetal shares have gained by 45%. So, can FRES shares continue to do well in 2021?
What’s the deal? Fresnillo is an Anglo-American company that is headquartered in London. It is a significant part of the FTSE 100 because of its £8.45 billion market cap. The firm operates seven mines that are mostly located in Mexico. It also has operations in Peru and Chile. These mines mostly produce silver and gold, which brings in more than £2 billion in revenue every year.
Why did Fresnillo shares rise: Fresnillo share price soared in 2020 because of the overall strong performance of silver and gold prices. For one, silver rose by more than 40% this year while gold price rose by more than 20%. Higher prices of these metals usually lead to more profits. Indeed, the company had one of its best years in modern times this year.
What next for Fresnillo in 2020: In general, Fresnillo will mostly depend on the price action of gold and silver. If the two metals rise, the company’s shares will do so as well. So, will they rise in 2021? Hard to say.
But, in the past, metals – silver in particular – is usually a cyclical product meaning that its price rises and falls under different circumstances. Therefore, after a strong performance this year, there’s a possibility that it will weaken in 2021.
On the daily chart, we see that Fresnillo share price made a triple-top at 1,380p recently. The price is also now along the 25-day and 50-day exponential moving averages. Therefore, in my view, I believe that the shares will break-out lower as bears target the 50% Fibonacci retracement level at 916p.
