Newmont Corp. (NYSE:NEM) stock fell more than 2% in Wednesday premarket trading as gold prices retreated.
Gold slipped below $4,350 an ounce Wednesday as hawkish signals from Federal Reserve officials outweighed the potential impact of lower oil prices on inflation and the interest rate outlook, according to Trading Economics.
Nasdaq futures fell 0.25%, while S&P 500 futures declined 0.05%.
Gold Pullback Pressures Newmont
The decline in gold is weighing on Newmont, whose earnings and cash flow are closely tied to bullion prices.
The pullback also comes after a strong run for Newmont shares over the past year. That leaves traders watching whether the stock can hold near-term support as momentum cools.
Technical Analysis
Newmont is trading about 10% above its 50-day simple moving average of $113.79. It is also more than 12% above its 200-day SMA of $110.55.
The 50-day average remains above the 200-day average following a golden cross in September. That setup points to a bullish longer-term trend.
However, the stock is about 2% below its 20-day SMA of $126.76. That level could act as near-term resistance.
Momentum has also weakened. The MACD is below its signal line, while the histogram is negative. Both signals suggest the recent rally is losing strength.
Key resistance sits near $135, just below the 52-week high of $135.29. Support is near $121.50. A break below that level could open the door to a deeper pullback.
Analyst Outlook
Newmont trades at about 16 times earnings. The stock carries a Strong Buy consensus rating and an average price forecast of $141.80.
RBC Capital maintained an Outperform rating on Sept. 16 and raised its price target to $155. Bernstein maintained an Outperform rating on Sept. 9 but lowered its target to $144. Scotiabank maintained a Sector Outperform rating on Aug. 12 and raised its target to $149.
Benzinga Edge Rankings
Newmont scores strongly on several Benzinga Edge measures.
Momentum stands at 90.78 out of 100, while Quality scores 82.02. Growth comes in at 83.92, while Value is lower at 63.43.
The rankings point to strong momentum, quality and growth characteristics. However, the latest pullback puts greater focus on whether support near $121.50 can hold.
Top ETF Exposure
Newmont has notable exposure through the Materials Select Sector SPDR Fund (NYSE:XLB), SPDR S&P Metals and Mining ETF (NYSE:XME) and Vanguard Materials ETF (NYSE:VAW).
Newmont represents about 8.14% of XLB, 5.41% of XME and 6.90% of VAW. As a result, large fund flows can contribute to buying or selling pressure in the stock.
Price Action
NEM Price Action: Newmont shares fell 2.40% to $124.20 in Wednesday premarket trading, according to Benzinga Pro data.
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