Why is the Newcrest share price sitting at 6-week lows?

Have investors lost their love for this ASX gold share?

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A woman holds a gold bar in one hand and puts her other hand to her forehead with an apprehensive and concerned expression on her face after watching the Ramelius share price fall today

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Key points

  • The ASX 200 looks like it is on track to finish the trading week on a high note
  • However, the Newcrest share price is not having the same experience today, falling to a new six-week low
  • Newcrest shares are likely dropping thanks to a big slide in the gold price itself

It looks as though the S&P/ASX 200 Index (ASX: XJO) is heading for a pleasant end to what has been a bumpy week. So far today, the ASX 200 has added a healthy 0.63%.

But the same can't be said of the Newcrest Mining Ltd (ASX: NCM) share price. Newcrest shares are having a shocker today. In early trade, the ASX 200 gold miner hit a low of $26.82.

Not only is that a significant slump, but it drags the Newcrest share price to a six-week low. Yep, the last time Newcrest was under $7 a share was back in early April. Right now, Newcrest shares have clawed back a little ground but are still down 1.71%, trading at $27.04 a share.

Since Newcrest's latest 52-week high, which occurred only just last month, Newcrest shares have lost around 10%.

So what's going on with this gold miner that has caused such a change of sentiment? After all, it has only been a few days since investors were buoyed by the news that Newcrest's takeover by the US gold mining giant Newmont got the green light.

Why is the Newcrest share price at a six-week low?

Well, it seems the culprit is a falling gold price. Earlier this month, gold looked like it was about to break its all-time record high of US$2,075 an ounce. Gold topped out at around SU4,050 an ounce in early May. But it has been falling steadily ever since. Today, the yellow metal is asking just over US$1,970 an ounce.

It appears that the prospect of higher interest rates in the United States might be to blame for this fall in value.

This explains why the Newmont bid isn't coming to the Newcrest share price's rescue. The deal is an all-scrip one, which will see Newcrest shareholders given 0.4 shares of Newmont for every Newcrest share owned. Since the Newmonth share price also depends on the gold price itself, both companies have been losing value in recent weeks.

Even so, Newcrest shares still remain up a pleasing 29.75% year to date, despite the near-10% drop we have seen recently.

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining. 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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