Why the Newcrest (ASX:NCM) share price is sliding to a 52-week low

Shares in the Aussie gold miner are under pressure in 2021

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Gold Bullion Sinking 16.9

The Newcrest Mining Ltd (ASX: NCM) share price is one constituent of the S&P/ASX 200 Index (ASX: XJO) under pressure right now. Newcrest is one of Australia’s largest gold and copper miners with an $18.9 billion market capitalisation.

However, shares in the Aussie miner are down more than 3% in the past week to $23.09 per share. That means the company’s shares are sitting just 0.4% above their 52-week low of $23.01 per share, set on Friday afternoon.

So, what’s happening to one of the largest ASX gold producers right now and what should investors be watching?

Why the Newcrest share price is sliding to a 52-week low

As with all resources shares, it’s important to look at the dynamics driving the underlying commodity. For Newcrest, that means looking at what is happening with gold prices right now.

Perhaps unsurprisingly, gold is struggling at the moment and that’s showing in the Newcrest share price. Global gold prices have been falling in recent weeks as investors turn away from the traditional safe-haven asset.

Fears of the US Federal Reserve’s tapering program (that is, removing significant stimulus from the market) combined with dwindling inflation fears, have meant gold prices have struggled in recent weeks. Gold is often seen as a good hedge against inflation and very much a defensive asset.

Investors have been increasingly turning to US Treasuries and the US dollar as an alternative to gold. That has been reflected in the recent declines in the Newcrest share price.

The recent slide to a new 52-week low comes amid a disappointing year for shareholders. 2020 was a good year for ASX gold shares with prices soaring to record highs and the outlook remaining strong heading into 2021.

That hasn’t proved to be the case, however, with the Newcrest share price sliding 10.4% lower in the year to date.

Foolish takeaway

The Newcrest share price slipped to a new 52-week low on Friday afternoon before kicking marginally higher to close the week at $23.09 per share.

Should you invest $1,000 in Newcrest right now?

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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 Bruce Jackson.

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