Why did the Newcrest share price just slump to a 6-year low?

It’s been a fairly disappointing start to the trading week this Monday for the S&P/ASX 200 Index (ASX: XJO). At the time of writing, the ASX 200 has fallen by 0.9% to just over 7,050 points. But it’s been even worse for the Newcrest Mining Ltd (ASX: NCM) share price.

Newcrest shares have had a shocker today. The ASX 200 gold miner has fallen a painful 4.9% so far this Monday to $18.40 a share at present. But Newcrest dropped as low as $18.38 just after midday as well.

Not only is that low watermark a new 52-week low for Newcrest. But it’s also the lowest share price the gold miner has touched in almost six years.

So what on earth has prompted Newcrest shares to such a dire start to the week?

Well, it would be tempting to blame the earnings report for FY22 that Newcrest dropped last Friday.

As we covered at the time, Newcrest reported a 25% drop in underlying profits to US$872 million. Earnings before interest, tax, depreciation, and amortisation (EBITDA) also fell 16% to US$2.054 billion, while gold production dipped 7% to 1,956 million ounces.

All of this led to a fall in earnings per share (EPS) of 27% and a halving of Newcrest’s final dividend to 20 US cents.

Gold doesn’t glitter for the Newcrest share price

But it’s rather difficult to blame today’s share price woes on this less-than-inspiring earnings report. That’s because last Friday when the report was released (pre-market), Newcrest shares ended up finishing the day by rising 3.64%.

So it’s more likely that the… panning that Newcrest shares are enduring today has more to do with the price of gold itself. The yellow metal has been out of favour for a while now. And, as my Fool colleague James reported this morning, gold had a torrid end to the last week on the US markets:

…the spot gold price was down 0.6% to US$1,760.30 an ounce. A strong US dollar put pressure on the precious metal last week, leading to five daily declines out of five. This is its longest losing run since November.

So this is probably why we are seeing such pain in the Newcrest share price this Monday. Not that it’s just Newcrest that is suffering. Its fellow gold mining peer Northern Star Resources Ltd (ASX: NST) has shed 2.72% today to $7.51 a share.

Gold Road Resources Ltd (ASX: GOR) has lost 3.5%, while Perseus Mining Limited (ASX: PRU) has dipped 2.7%.

So not a great start to the trading week for ASX gold shares all around.

At the current Newcrest Mining share price, this ASX 200 gold share has a market capitalisation of $16.4 billion, with a dividend yield of 2.16%.

The post Why did the Newcrest share price just slump to a 6-year low? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• Why Accent, Cochlear, Newcrest, and Santos shares are charging higher today
• Everything you need to know about the latest Newcrest dividend
• Newcrest share price lifts despite profit falling 25%

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining 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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