It really has been a rollercoaster ride for the Newcrest Mining Limited (ASX: NCM) share price in 2017.
After peaking at $25.13 in April, the gold miner's shares last closed almost 20% lower at $20.33.
Where will its shares go next?
Despite the sizeable decline in its share price since April, Newcrest's shares are still changing hands at a lofty 32x estimated full-year earnings.
While Newcrest's world class operations generally mean its shares trade at a premium to its industry peers, I believe this is still quite excessive.
Especially when the shares of rivals St Barbara Ltd (ASX: SBM) and Resolute Mining Limited (ASX: RSG) trade at under 10x forward earnings.
As a result, I believe there is significantly more downside risk than upside potential for its shares at present. Especially if the gold price sinks lower from here.
Where is the gold price heading?
While there are risk events that could cause a flight to safety and take the gold price higher, I'm not convinced there is material upside left in the gold price.
Especially with rates in the United States expected to rise periodically over the next 12 months.
I expect rising rates will result in a stronger U.S. dollar, weakening the gold price. Furthermore, as treasury yields in the United States widen, I believe gold will lose its allure with traders.
All in all, this could set the gold price on a path to US$1,000 an ounce. This will undoubtedly put significant pressure on the Newcrest share price in my opinion.
