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

By:
on Oct 4, 2023
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  • Newmont share price has been in a freefall in the past few months.
  • Gold price has formed a triple-top pattern on the weekly chart.
  • The stock faces major headwinds in the coming months.

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Newmont (NYSE: NEM) stock price has crashed hard in the past few months as gold prices plummeted. The shares plunged to a low of $35.40 on Tuesday, the highest level since March 2020. It has retreated by more than 56% from its highest point in April 2022.

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Gold price is sinking

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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

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Newmont stock

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.

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