Shares of Newmont (NEM +0.96%) slumped on Wednesday, tanking 5.9% by the market's closing.
Gold prices are falling, but there's a reason why the gold stock is falling even faster.
Image source: Getty Images.
Why is gold falling so much?
U.S. inflation topped 4% in May for the first time since April 2023, according to the U.S. Bureau of Labor Statistics. Rising oil and gas prices amid escalating Middle East tensions were largely to blame for high inflation.
Higher inflation makes Federal Reserve interest rate cuts less likely. This hurts precious metals like gold, which lose their appeal compared to interest-bearing bonds when interest rates stay elevated.
Gold prices have already dropped substantially in recent weeks. They extended their decline on Wednesday, falling more than 4% to below $4,100 per ounce, or levels last seen in November 2025.
NYSE: NEM
Key Data Points
Gold producers like Newmont, which generate revenue and profits from extracting and selling gold, take the biggest beating when gold prices fall.
Why is Newmont stock crashing?
Newmont stock has tumbled 20% in just one month, as of this writing. While commodity stocks are notoriously volatile, the drop comes despite Newmont's robust operational showing as the largest U.S. gold producer. It generated a record quarterly free cash flow of $3.1 billion in the first quarter and doubled its share buyback program, authorizing an additional $6 billion.
The problem is that Newmont expects 2026 gold production to fall to 5.3 million ounces from 5.7 million ounces in 2025 because of planned sequencing at two mines and lower expected grades at another. Moreover, it expects its all-in-sustaining costs to climb significantly this year.
This combination leaves the gold stock particularly vulnerable to gold prices now. If prices fall further, the trifecta of lower output, higher costs, and weaker pricing could deeply hurt its profits and cash flows.
