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Gold stocks decline as growth remains low

SOUTH Africa’s gold stocks fell to the lowest level in two months after Reserve Bank governor Gill Marcus said growth was likely to remain low and on concern that little progress is being made in US budget talks.

The five-member FTSE/ JSE Africa Gold Mining index yesterday slid 2.6 percent to 2 253.33 in Johannesburg, the lowest close since September 5.

Harmony Gold declined 3.9 percent and AngloGold Ashanti slipped 2.4 percent, while Gold Fields retreated 2.5 percent.

Growth in the fourth quarter “is likely to be very low,” Marcus said in Johannesburg yesterday.

The economy expanded an annualised 1.2 percent in the third quarter, the slowest pace since the 2009 recession, as mining output plunged because of strikes, Statistics SA said yesterday.

“Every time there are worries about growth, miners will get hammered,” Sasfin Securities director David Shapiro said yesterday. “The rand weakens, commodity prices weaken, people get worried about growth and we go down.”

Marcus’s comments saw the rand extend its first decline in five days against the dollar, slipping as much as 0.6 percent to R8.8918.

The currency retreated earlier as commodities fell on concern talks to avoid the US’s so-called fiscal cliff are not progressing.

US President Barack Obama was scheduled to meet with business leaders yesterday after Senate majority leader Harry Reid said on Wednesday that he was disappointed with congressional budget talks aimed at averting $607 billion (R5.38 trillion) in tax hikes and spending cuts. He said the 34-member Organisation for Economic Co-operation and Development also lowered growth forecasts for advanced economies.

Standard & Poor’s GSCI index of commodities declined for a third day, losing 1.4 percent, the most in three weeks. Gold for immediate delivery retreated 1.7 percent, the most since November 2, to $1 712.35 an ounce.

The gold stock index’s 50-day historical volatility, a measure of stock swings, increased to 28.2 from 27.7 on Tuesday. The FTSE/JSE Africa all share index’s volatility measure for the same period was at 10.3, compared with 10 on Tuesday.

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