Why has the Newcrest share price tumbled 9% in a month?

Newcrest shares have endured a tough run. We take a look at why.

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Key points

  • The Newcrest Mining share price has dropped 9% in the past month 
  • Gold prices hit a three-month low on 13 May before recovering some of the losses 
  • Gold miners Evolution Mining and Northern Star Resources have also had a tough month 

The Newcrest Mining Ltd (ASX: NCM) share price has been struggling in the past month.

The ASX 200 gold miner’s share price has descended nearly 9% since market close on 6 May and is currently trading at $24.07. For perspective, the S&P/ASX 200 Index (ASX: XJO) has dropped nearly 1% in the same timeframe.

So what is happening to the Newcrest Mining share price?

Gold loses its shine

Newcrest is not the only ASX gold share to slump in the past month. The Northern Star Resources Ltd (ASX: NST) share price has sunk almost 10% since market close on 6 May, while Evolution Mining Ltd (ASX: EVN) shares have shed 5%.

Gold prices have fallen more than 2% from US$1,882.80 an ounce on 6 May to US$1,843.70 an ounce at the time of writing, CNBC data shows. The gold price hit a more than three month low of US$1,808.20 an ounce on 13 May before recovering to the current price.

Broker downgrades may have also impacted the Newcrest share price. UBS cut the Newcrest 12-month price target by 2.2%, while Macquarie analysts lowered their target by 2.9% after the company’s third-quarter results on 28 April. However, these brokers still believe the company’s shares will jump higher than the current price.

In early May, Newcrest was listed as a share that has fallen into “underheld” territory in the JP Morgan’s Fund Manager Radar report.

On 23 May, the market was advised Newcrest will operate the next stage of the Wilki Project in the Paterson Province of Western Australia. As part of an agreement with Antipa Minerals Limited (ASX: AZY), Newcrest will spend $6 million on exploration within the next two years. The company then needs to pay $10 million by 2025 to attain a 51% joint venture interest and $44 million by March 2028 to own a 75% share in the project.

In recent news, analysts at JPMorgan have placed an overweight rating on the Newcrest share price with a $30 price target. This is 24% more than the share price at the time of writing.

Newcrest Mining share price snapshot

The Newcrest share price has slipped nearly 13% in the past year, while it has descended nearly 2% in the year to date.

For perspective, the benchmark ASX 200 index has lost 2% in the past year.

Newcrest has a market capitalisation of about $21 billion based on its current share price.

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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