Mining stocks to buoy market as gold soars, analysts say

Mining stocks will continue to do better in the market as gold prices are seen to keep on rising, an analyst said over the weekend. “Mining shares [would] continue to outperform the market as gold prices continue to soar," said Jonathan Ravelas, chief market strategist of Banco de Oro Unibank Inc. The Philippine Stock Exchange index on Friday rose 2.5 percent week-on-week to 4,078.87. The price of gold on Friday reached $1,292 per troy ounce, up 1 percent from Monday. “Such positive behavior for the week can definitely be attributed to the growing activity in mining. The attention that the mining firms received held a big weight on the index’s direction," said analyst Maria Arlysa Narciso of AB Capital Securities Inc. In its weekly report, AB Capital Securities Inc. said the PSEi has already reached the overbought level. “After successive gains and a strong buying appetite, the index has already reached the overbought level. Indicators are already signaling a need for a correction for the index to return to a less volatile movement," Narciso noted. “However, it seems that the correction we’ll experience is not as enough as we are expecting. Mostly, the direction the index will take is sideways instead of the necessary rest and retracement," she said. Still, investors will be waiting for corporate news which will serve as a factor to drive up stocks, Narciso pointed out. For now, there is no direct correlation between the US and the Philippine markets, she said. “Except maybe for a few instances when the Dow Jones’ jump was impressively high." Immediate support now lies at the 4,000 levels, Ravelas said. “A break below the said levels could create the much awaited ‘pause’ possibly towards the 3,800 to 3850 levels," he added. —With Jesse Edep/VS, GMANews.TV