Gold miners drop as Newmont’s earnings disappointment fuels cost concerns

Gold miners lost ground on Thursday despite a rise in the price of gold, as a disappointing earnings report from industry player Newmont (NYSE:NEM) put pressure on the sector.

NEM dropped nearly 15% after missing analyst expectations with its Q3 earnings. Higher-than-expected costs offset the impact of increased gold prices during the quarter.

Worries about rising costs infected the rest of the sector, putting pressure on many names in the group. This came despite Thursday’s tick higher for the underlying commodity, with front-month Comex gold (XAUUSD:CUR) for October delivery advancing 0.7% to end at $2,734.90/oz.

Looking at the sector as a whole, the VanEck Gold Miners ETF (NYSEARCA:GDX) dropped 2.6% during the session, ending the day at $42.13. The ETF had reached a 52-week high of $44.22 earlier this week, its highest mark since August of 2020.

Still, thanks to higher gold prices, GDX remains nearly 38% higher since the close of 2023. The ETF has advanced nearly 44% in the past 12 months.

Here are some of the gold names that dipped during Thursday’s trading:

• Coeur Mining (NYSE:CDE) -2.6%
• Freeport-McMoRan (NYSE:FCX) -2.3%
• Barrick Gold (NYSE:GOLD) -2.3%
• Osisko Gold Royalties (NYSE:OR) -1.1%
• Agnico Eagle Mines (NYSE:AEM) -0.8%
• Eldorado Gold (NYSE:EGO) -0.8%
• Royal Gold (NASDAQ:RGLD) -0.7%
• Gold Fields (NYSE:GFI) -0.5%
• Wheaton Precious Gold (NYSE:WPM) -0.5%
• Franco-Nevada (NYSE:FNV) -0.3%

Looking at the sector as a whole, Seeking Alpha analyst Mike Fay argued that gold miners offered a buy-the-dip opportunity on the latest NEM-led drop. He noted that inflation pressures present a strong case for the precious metal and that miners should be able to overcome their recent cost headwinds.

“I think the case for gold is somewhat obvious at this point,” Fay stated, although he quickly added “the case for the producers has been much less straightforward with increasing costs over the last few years.”

Still, the analyst contended that “the fundamental setup appears to be improving” for gold miners and he expects “a phenomenal year for mining stocks.”

Gold ETFs: (GLD), (GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (RING), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)

More on gold miners:

• Newmont Corporation (NEM) Q3 2024 Earnings Conference Call Transcript
• GDX: Dips Are Buys From Here
• Newmont: Improved Free Cash Flow Generation On The Back Of Record Gold Prices
• Gold resumes rally but top miner Newmont plunges in worst day since 2008
• Newmont shares slide after Q3 miss driven by higher costs