Why has the Newcrest share price gained 11% in a month?

It's been a great month for shareholders in the gold miner.

| More on:
Woman holding gold bar and cheering.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Newcrest shares are edging lower today but the company's share price is closing in on a 52-week high
  • Shares have received a boost following an uptick in gold prices
  • Macroenvironmental factors have also played a hand in supporting the Newcrest share price

The Newcrest Mining Ltd (ASX: NCM) share price has surged in the last month, nearing its 52-week high of $29.27.

Since 20 March, the gold miner's shares have gained around 10.8%, making it one of the best performers across the sector. In comparison, the share price of fellow miner Northern Star Resources Ltd (ASX: NST) increased by 5.8% across the same timeframe.

At the time of writing, Newcrest shares are taking a slight breather to swap hands at $28.77, down 0.24%.

What's driving the Newcrest share price higher?

It seems the acceleration in the price of gold has boosted investor sentiment. Traditionally, investors flock to the yellow metal as a safe-haven asset when there is uncertainty in the market.

While the world is slowly moving past COVID-19, the war between Russia and Ukraine has sparked a gold rush.

Last month, the price of gold soared above the US$2,000 barrier but has since fallen a touch under. At the time of writing, gold is fetching US$1,946 an ounce.

Compared to 20 March, the precious metal had been priced at around US$1,920. This represents an increase of about 1.3% over the 30-day period.

Accordingly, Newcrest shares have also risen from $25.97 a month ago to today's price of $28.77.

It's worth noting that the price of gold spiked to an all-time high of US$2,072.90 on 7 August 2020. Newcrest shares closed at $33.27 on the day.

You may be wondering why the company's share price is nowhere near the level it was in 2020, given the price of gold is almost the same.

This is because of other macroenvironmental factors, such as the United States Federal Reserve's intent on lifting interest rates this year. It noted that inflation accelerated to 6.9% in the US, the highest rate in nearly four decades.

Following its lead, the Reserve Bank of Australia signalled its move with two expected rate hikes for 2022.

Rising interest rates can drag down the price of precious metals and it appears investors are mixed on these impacts for the moment.

What do the brokers think?

A number of brokers rated the Newcrest share price with different price points in late March.

The team at UBS cut its outlook on the company's shares to "neutral" from "buy". However, the broker raised its 12-month price target by 2.3% to $27.10.

Based on the current share price, this implies a potential downside of 6% for investors.

On the other hand, Morgan Stanley analysts reduced their rating on Newcrest shares by 1% to $33.70. They believe the company's shares still have some room to bounce higher.

This implies a potential upside of 17% from where Newcrest shares trade today.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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 Bruce Jackson.

More on Gold

Miner looking at a tablet.
Gold

The end of the gold rush: Can these ASX Gold shares keep rising?

Has the gold rush run its course?

Read more »

A man in a high visibility vest and hard hat at the wheel of a heavy mining machinery looks backwards.
Gold

Spartan Resources shares rising strongly on final day of trading

S&P Dow Jones Indices will remove Spartan Resources from the ASX 200 and replace it with Infratil.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Gold

Up 41% in 2025, why is this ASX 200 gold share charging higher again today?

Investors are piling into the ASX 200 gold stock today. But why?

Read more »

Happy miner giving ok sign in front of a mine.
Gold

Why this 'undervalued' ASX 200 gold stock is tipped to outperform

A leading expert believes this ASX 200 gold stock offers investors significant near-term upside.

Read more »

Red arrow on gold bars going down.
Gold

Up 125% in a year, why is this ASX 200 gold stock sinking on Monday

The high-flying ASX 200 gold stock has come under selling pressure today. But why?

Read more »

Piles of gold and silver bars.
Gold

Silver reaches a 14-year high. Will it outperform the gold price this year?

It's a tight race between these precious metals.

Read more »

Woman holding gold bar and cheering.
Gold

Why Macquarie expects this surging ASX 200 gold stock could leap another 40%

Macquarie forecasts another year of strong outperformance from this fast-rising ASX 200 gold miner.

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

Why this surging ASX All Ords gold stock is tipped to rocket another 148%

A leading wealth manager expects this ASX gold miner to deliver more outsized gains.

Read more »