South African miners reaped significant rewards on the Johannesburg Stock Exchange (JSE) as the price of gold surged past the psychological barrier of $2 800 (R52 250) per ounce, registering a 1.8% increase on Friday.
This impressive rally, which has seen the yellow metal’s prices climb over 35% in the past year, underscores a growing trend of investors seeking safe-haven assets amidst turbulent economic conditions.
While gold led the surge, it was the platinum group metals (PGM) and diversified miners that dominated trading on Friday.
Impala Platinum and Northam Platinum each posted gains exceeding 5%, while Sibanye-Stillwater rose by 4.7%. Notably, Anglo American Gold and Harmony Gold also saw appreciable increases of 3.7% and 2.9%, respectively.
This uptick in miner performance highlights how closely linked market dynamics are to fluctuations in precious metal prices.
Ricardo Evangelista, a senior analyst at ActivTrades, said the rally in gold was driven by demand for haven assets amid uncertainty over the impact of the new US administration’s tariffs on inflation and economic growth.
Evangelista also said the desire for assets characterised by stability has been further fuelled by uncertainties stemming from the new US administration’s tariffs on imports, particularly regarding their potential impact on inflation and economic growth.
“If implemented, these tariffs could drive inflation higher in the US and potentially trigger a trade war, darkening the global economic outlook. Gold tends to perform well in a stagflationary environment characterised by high inflation and low growth,” Evangelista said.
“This dynamic is further reinforced by ongoing geopolitical instability, disappointing US GDP figures released on Thursday, and a muted reaction from Treasury yields to the Federal Reserve’s hawkish pause, all of which have provided additional support for the non-yielding precious metal. Against this backdrop, further gains in bullion prices cannot be ruled out.”
With US President Donald Trump’s confirmation of a 25% tariff on imports from Canada and Mexico that took effect on February 1, questions about other commodities, especially crude oil, linger.
Nigel Green, the CEO of deVere Group, emphasised the tariffs’ potential impact on investors, particularly if oil is embroiled in the tariff web, which could escalate costs for consumers and enterprises alike, further heightening inflationary concerns.
“This move introduces another layer of unpredictability at a time when markets are already contending with monetary policy shifts and geopolitical risks,” Green said.
“Investors should consider diversifying their portfolios to hedge against heightened volatility and potential trade disruptions by increasing exposure to defensive sectors such as healthcare, utilities, and consumer staples, as well as exploring alternative assets like gold and real estate.”
Despite the pressure on other markets, the US Federal Reserve held its interest rates unchanged last week while abstaining from hinting at imminent shifts in policy.
This has fuelled expectations of potential rate cuts later in the year, creating an environment conducive to further gains in precious metals.
Macro strategist, Otavio Costa (@TaviCosta), from Crescat Capital raised an intriguing point on social media platform X, questioning whether gold’s surging prices may be reaching an overvalued point.
However, he suggested that when adjusted for the US money supply, current prices remain markedly lower than their historical highs, reinforcing the notion that the market might be on the cusp of a long-term bullish trend for gold.
“With central banks urgently accumulating the metal worldwide, a return to those levels wouldn’t be surprising,” Costa said.
“This reinforces the likelihood that we are entering a long-term bullish trend for gold. Even more importantly: Gold money supply terms is currently on the verge of a 45-year breakout.”
BUSINESS REPORT