Here's How the Plummeting Price of Gold Is Affecting This Leading Gold Mining Stock

After setting a breathtaking pace for what felt like all of 2025 and the first several weeks of this year, gold prices are tumbling, and mining stocks are going along for the bearish ride.

Count Newmont (NYSE: NEM), one of the most widely followed gold stocks, among the bullion miners that are being punished as the commodity's price retreats. For the month ended March 24, shares of Newmont are off 20.3%, a decline that's nearly 430 basis points worse than that of the largest exchange-traded fund (ETF) backed by physical holdings of the yellow metal.

This mining stock is suffering as gold prices falter. Image source: Getty Images

For better or worse, Newmont and its rivals are behaving as expected of late. Gold miners are highly correlated, in both directions, to gold's price. In fact, these stocks are often considered leveraged plays on the precious metal because their moves can be more pronounced than gold's. That's attributable to a somewhat fixed cost structure, meaning that when bullion prices rise (or fall), extraction costs don't usually do the same, but profitability increases. These days, however, it's not all golden for miners' costs.

Gold, Newmont contending with a lot of headwinds

Clearly, Newmont and friends are tethered to gold prices, so it helps to understand what's ailing those prices today. Some of bullion's bearishness is attributable to a strong dollar and rising bond yields. Commodities, including gold, are priced in dollars, meaning that, though there are exceptions, when the dollar is strong, commodities can and do slump.

One thing that's important to know about investing in bonds: When yields rise, prices fall. That's what's happening today because the Federal Reserve didn't lower interest rates earlier this month and may only do so once this year. That's disappointing to investors who were banking on multiple rate cuts this year.

Interest rates affect gold for a simple reason: Higher bond yields diminish bullion's appeal because gold doesn't come with dividends or interest payments. Why deal with commodities market volatility when you're paid to own Treasuries? Hence, gold is faltering, and stocks like Newmont are faring even worse.

Not surprisingly, the war in Iran is also spooking investors in mining stocks, and again, the situation isn't complex. That conflict has oil prices trading around $100 a barrel and threatening to rise further, which is bad news for energy-intensive industries, of which mining is one. By some estimates, energy, including the diesel that powers excavators, trucks, and other equipment, comprises 20% to 30% of the costs companies like Newmont deal with.

Simple outlook for Newmont

In investing, guarantees don't exist, but it's certainly within the realm of possibility that if gold prices rebound, Newmont will follow suit.

There are other reasons to evaluate the stock, including a credit rating that's well into investment-grade territory, the company's commitments to reducing debt and repurchasing its own shares, and a disciplined approach to spending, meaning it won't needlessly risk capital even if gold races to a fresh round of all-time highs.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.