Why has the Newcrest share price lost its shine of late?

The Newcrest Mining Ltd (ASX: NCM) share price has continued to tread lower throughout the past month.

Over the past 30 days, the gold miner’s shares are down 18.2% to $18.99 apiece at yesterday’s market close.

This is a tad higher than the multi-year low of $18.97 reached yesterday afternoon.

Shares in Northern Star Resources Ltd (ASX: NST) have also declined by 14.1% over the same period. This is more in line with the benchmark S&P/ASX 200 Resources Index (ASX: XJR), which has dropped by 14.5%.

Evidently, Newcrest shares are among the worst performers in the sector of late.

Let’s take a look at what’s been taking the shine off this ASX gold mining stock.

Why is the Newcrest share price in a funk?

Extreme volatility mixed with investor concerns about further rate hikes by major central banks is impacting the Newcrest share price.

Inflation has been soaring as food and energy prices hit record highs.

In May, inflation rose by 8.6% in the United States, which was the highest level in the past four decades. That was eclipsed last night when the US announced inflation had rocketed to 9.1% in June.

This doesn’t bode well for gold prices, as it’s likely the Federal Reserve will again lift interest rates.

When this occurs, investors tend to shift their money into government bonds because they are perceived to be safe-haven assets.

The price of gold has declined by 4% over the past month to trade at about US$1,730 per ounce. This is the lowest level since August 2021, and a big fall from the US$2,070 it was fetching on 8 March 2022.

If interest rates continue to go up — in the US or here at home — investor appetite for gold could recede. This would likely pile further selling pressure onto Newcrest shares.

What do the brokers think?

A couple of brokers believe the Newcrest share price is currently a bargain.

According to ANZ Share Investing, UBS cut its price target on the company’s shares by 14.5% to $22.40 apiece. Despite the cut, that means there is still a potential upside of 18% for investors.

While the broker reduced its assessment of Northern Star as well, it still sees value in the gold miner.

JPMorgan also changed its outlook on Newcrest from overweight to neutral with a price target of $23.

Newcrest commands a market capitalisation of approximately $17.16 billion.

The post Why has the Newcrest share price lost its shine of late? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for Northern Star share price in FY23?
• 5 things to watch on the ASX 200 on Wednesday
• Down 23% in June, can the Northern Star Resource share price go up in July?
• 2 ASX 200 gold mining shares getting plastered with new multi-year lows
• Is this a good time to go digging for ASX 200 mining shares for FY23?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Aaron Teboneras has positions in Northern Star Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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