Newmont stock is at risk as gold price forms a triple top pattern

October 03, 2023 09:05 PM PDT | By Invezz

Newmont stock is at risk as gold price forms a triple top pattern — Image source: Invezz

Gold price is sinking

Newmont, the biggest gold mining company in the world, has been under pressure after peaking in 2022. Gold price has plummeted to a low of $1,820, the lowest level since February 27th. It has fallen by more than 12.4% from its all-time high.

Worse, gold has formed a triple-top pattern, pointing to more downside in the coming months. This top means that gold can crash to $1,606, the lowest level in October. This price is the neckline of the triple-top pattern and is almost 12% below the current level.

Gold price chart

Newmont, like other mining companies, do well when their primary commodities are rising. This explains why the stock has plunged in the past few months.

Further, the recent results showed that the company’s production was falling as the cost of doing business rose. The company’s revenue dropped by 12.26% in the quarter to over $2.6 billion. This happened as the company decided to suspend its Penasquito and Akyem operations.

Newmont produces more than 1.2 million ounces of gold and realized a price of $1,965 per ounce. Therefore, even with increased production, I suspect that the company’s revenue and profitability will continue to fall in the second half of the year.

Newmont has a number of advantages. For example, most of its operations are in Australia and the Americas, which is a good thing. Additionally, it has a strong balance sheet with over $3.2 billion in cash. It has also expanded its operations by acquiring Newcrest, a company with vast resources in Australia.

Most importantly, I believe that gold demand will continue rising as key central banks like in China and Russia boost their stakes.

Newmont Mining stock price forecast

NEM chart by TradingView

The weekly chart shows that the Newmont share price has been in a strong bearish trend in the past few months. It has retreated below the important support at $35.60, the lowest swing in October last year.

The shares formed a death cross pattern on April 3rd. This cross happened after the 200-week and 50-week make a bearish crossover. At the same time, the Relative Strength Index (RSI) has pointed downwards.

Therefore, the outlook for the shares is downwards, with the next key support at $29.65, the lowest level in March 2020. In the long term, however, the shares will likely bounce back as gold demand rises.

The post Newmont stock is at risk as gold price forms a triple top pattern appeared first on Invezz

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.