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Where next for the Newcrest Mining Limited share price?

aerial view of dump truck full of dirt driving along road in open cut mine
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It certainly has been a bumpy ride for the Newcrest Mining Limited (ASX: NCM) share price so far in 2017.

After peaking at $25.13 in April, the leading gold miner’s shares closed yesterday at $19.77. This means its shares have lost 21% of their value in under three months.

Where next for the Newcrest Mining share price?

Ultimately it is the gold price that will have the biggest say in where the Newcrest share price goes next.

Unfortunately for shareholders, I feel there is far more downside risk for the gold price than upside potential.

With rates in the United States continuing to rise periodically, I expect bond yields to continue widening, reducing the appeal of gold with investors.

Currently the spot gold price is fetching US$1,225 an ounce, down around 5.5% since this time last month.

And unless tensions escalate in North Korea, I can’t see any near-term catalysts for driving it significantly higher from here.

Should you avoid Newcrest?

Whilst I think that having a little exposure to gold in your portfolio can be a good thing, I wouldn’t be in a rush to do it just now.

As rates normalise in the United States over the next couple of years, I wouldn’t be surprised to see the gold price start to fall towards the US$1,000 an ounce level.

This is likely to weigh heavily on the shares of Newcrest and fellow gold miners Resolute Mining Limited (ASX: RSG) and Northern Star Resources Ltd (ASX: NST).

In light of this, I would avoid the sector for the time being and wait for a better entry point.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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