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Newcrest commentary well received

There weren’t many surprises in Newcrest Mining’s second-quarter output report today, as the production numbers were pre-released on 15 January.

The miner didn’t provide commentary on the 15 January release, but the production figures were pretty good. As a result, today’s primary focus was on cost and debt commentary. Costs were down significantly, particularly at Telfer and Hidden Valley. For the December quarter, all-in sustaining costs fell to $921/oz, down from $1,093/oz the previous quarter.

At the same time, Newcrest (NCM) maintained its FY14 production guidance and forecast all-in sustaining costs to fall further. NCM, like other gold miners, is facing challenges from a weaker gold price. The miner is focusing on being cash flow positive at gold prices lower than A$1,450/oz, which will be a challenge.

The balance of factors for gold miners remains skewed to the downside, especially with the gold price remaining choppy and vulnerable. Should the Fed choose to accelerate its tapering next week, this could lift the USD and weigh on gold even further.

Early strength greeted by selling

From a price action perspective, we’ve seen NCM gently drift higher after bouncing off $7.50. After a fairly positive start this morning it has pulled back towards the $9 mark. The $10 level seems to be presenting some resistance for the stock and could be the trigger for a near-term pullback. Recent lows in the $7 levels will probably be considered as targets by traders looking to short the stock.

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