Why Did Newmont Stock Just Crash Below $100?
Key Points
The sell-off in gold has accelerated following the Federal Reserve's latest interest rate decision.
Newmont's significant exposure to gold is hurting the stock price.
- 10 stocks we like better than Newmont ›
Inflation fears have gripped the markets, and the conflicts in Iran and the Middle East are taking an ugly turn. One casualty of the market chaos is Newmont (NYSE: NEM) stock.
Shares of the world's largest gold mining company fell another 10% in early Thursday trading, breaking below the $100 mark for the first time since early January. Newmont stock has now retreated nearly 30% from its Jan. 29 52-week high of $134.88 per share on Jan. 29, and is now trading almost 30% off that 52-week high.
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Here's all you need to know.
Image source: Getty Images.
Why does Newmont stock keep falling?
Precious metals are getting hammered. Gold plummeted by more than 5% to below $4,600 per ounce on Thursday, hitting its lowest level since January.
On Wednesday, the Federal Reserve kept interest rates unchanged amid surging oil and gas prices and high inflation. Brent crude oil price jumped nearly 7% to $114 per barrel in early Thursday trading amid escalating attacks on the Gulf energy infrastructure.
This creates a perfect storm for gold, as higher interest rates increase the opportunity cost of holding gold and make it less appealing. Rising energy costs, meanwhile, not only spur inflation but also put pressure on miners' costs and margins.
Not surprisingly, gold stocks are tanking today, with large-cap stocks like Newmont taking the biggest hits.
Should you buy or sell the gold stock now?
Chaotic times like these are also the biggest tests of patience for investors. While it's hard to predict where oil or gold is headed, here's what you can do with your Newmont.
If you own shares, you shouldn't panic-sell as Newmont is on a strong footing, generating record free cash flows last year and using the money to strengthen its balance sheet to help it navigate difficult times. If you're planning to buy Newmont, you may just want to wait a bit for the dust to settle if the volatility feels scary.
Should you buy stock in Newmont right now?
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Neha Chamaria 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.
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