JOHANNESBURG (Reuters) – The South African rand took a breather on Tuesday, shedding some of its gains that have been fuelled by the gold price extending its historic run to an all-time peak.
At 1507 GMT, the rand traded at 18.15 against the dollar, more than 0.3% weaker than its previous close.
Gold hit a record $3,038.26 per ounce, continuing its rally as investors seek cover from trade tensions sparked by U.S. President Donald Trump’s tariff policies. [GOL/]
South Africa is a major producer of precious metals, and analysts say a record gold price could encourage local miners to boost output.
“At some point a gold price that continues to rise will excite local miners to make a greater effort to mine difficult-to-reach gold deposits. What may not have looked viable several years ago must be looking interesting now,” said ETM Analytics in a research note.
The rand has remained resilient despite an uncertain domestic and global backdrop.
The national budget is deadlocked for the first time in the post-apartheid era because of disagreements in the ruling coalition.
Relations with the United States have rapidly soured since Trump’s return to the White House in January, with the U.S. leader cutting aid to South Africa and analysts saying the African country’s preferential trade status under the U.S. African Growth and Opportunity Act (AGOA) could come under threat.
In terms of domestic data, the focus this week is on Wednesday’s inflation figures and Thursday’s monetary policy announcement. Economists polled by Reuters think the South African Reserve Bank could pause its rate-cutting cycle given abundant risks.
The Johannesburg Stock Exchange’s Top-40 index closed about 0.5% higher. The benchmark 2030 government bond was stronger, with the yield down 3.5 basis points at 9.125%.
(Reporting by Sfundo Parakozov with additional reporting by Bhargav Acharya; Editing by Alexander Winning, Susan Fenton and Alex Richardson)
