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.
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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.
