Gold rallies as investors head for safe havens
The rand weakened as the dollar strengthened against emerging-market currencies.
The JSE gold mining index climbed 4.97percent to 2913 points in early trade before shedding 3.93percent to 2885 points.
The gold price climbed 0.75percent to $1582.46 (R23135).
Several Asian markets were shut for the lunar New Year holidays yesterday, causing a lack of liquidity and exacerbating the decline.
On the JSE, AngloGold Ashanti accelerated 4.63percent to close at R307.02. GoldFields inched up 2.47percent to R93.67. Harmony Gold rose 2.41percent to R52.23, and DRDGold ended the day flat at R9.
ActivTrades chief analyst Carlo Alberto de Casa said the gold price was benefiting from the continuing global risk-off sentiment due to the coronavirus outbreak.
De Casa said the gold price started the week in the green as fears over the virus spreading further pulled up the price, with investors switching from stocks to safe havens.
“Despite the strength of the greenback, the bullion price is taking advantage of this uncertain situation and has recovered to $1580,” De Casa said.
“The main trend remains bullish, with the short-term correction seen in the last few weeks seemingly over, increasing the chance of the price achieving a new seven-year high in the next few weeks.”
Oil fell to $59.30 a barrel, declining for the sixth day in a row, approaching the key support level of $51 to $51.50.
Metal prices - such as iron ore - were trading weaker yesterday as markets assess the impact of the virus on the Chinese and global economies.
Andre Botha, a dealer at TreasuryONE, said: “Markets have started the new trading week on a risk off footing as the coronavirus continues to unnerve investors, and we see a flight to safe-haven assets.
“Gold is up at $1579.30, but platinum and palladium are lower, and oil has fallen to $59.30.”
The movements in the markets also put the rand under pressure. It lost 1.11percent and was trading at about R14.57 to the dollar.
There may be more volatility in store for the rand in the short term, and it may extend its losses if investors stampede to safe havens such as gold.
A treasury partner at Peregrine Treasury Solutions, Bianca Botes, said the rand succumbed to the risk-off sentiment.
“The rand is under pressure amid emerging-market volatility and broader risk-off sentiment,” Botes said.
“The market is also gearing up for the upcoming Budget and Moody’s review that is likely to result in South Africa becoming sub-investment grade. The rand has lost 1.3percent during trade today, reaching lows of R14.56/$.”