Tuesday, 06 February 2018

South Africa’s rand was weaker early on Tuesday, hurt by a broad recovery in the dollar and locally by the political stalemate as the ruling African National Congress (ANC) said it would meet later in the week to discuss the president’s future.
At 0640 GMT the rand was 0.16 percent weaker at 12.1450 per dollar compared to an overnight close of 12.1250 in New York.

Senior officials of the ANC met on Monday as pressure grew on President Jacob Zuma to step down or for the party to push him out, spurring some short-term gains in the rand.

Zuma’s scandal-plagued tenure has been seen as a weight on the economy, and the rand has soared to its firmest in over two years as the likelihood of his removal heightened after Cyril Ramaphosa was elected party chief in December.

Analysts said the lack of clarity on Zuma was keeping investors cautious and would dent short-term demand.

“This combined with a broad based dollar recovery has the rand on the back foot, and until such time as we have clarity on this, the local unit is likely to remain under pressure, with the 12.00 level likely to provide support,” said Nedbank’s Reezwana Sumad in a note.

Bonds were a touch weaker with the yield on the benchmark paper due in 2026 adding 0.5 basis points to 8.51 percent.

Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 3.5 percent.

Reporting by Mfuneko Toyana; Editing by Robin Pomeroy (Reuters)

Published in Bank & Finance

Gold prices rose on Tuesday as a rout in global equities prompted investors to seek shelter in safe havens such as gold, although expectations of more U.S. rate hikes this year weighed on the market.
Spot gold was up 0.3 percent to $1,342.95 per ounce at 0722 GMT following Monday’s 0.5 percent gain.

Prices fell 1.2 percent on Friday, the most since Dec. 7, 2017, after stronger-than-expected U.S. payrolls data shored up expectations that a pick-up in inflation will spur further rate hikes this year, boosting the dollar, in which it is priced.

U.S. gold futures for April delivery rose 0.7 percent to $1,345.60 per ounce on Tuesday.

ANZ analyst Daniel Hynes said he suspected an even bigger rally in prices considering the correction in the equity markets.

“The rate hikes have already been priced in by the market... but it’s certainly got the ability to temper the upside in gold prices,” Hynes said.

Asian shares fell sharply after Wall Street suffered its biggest decline since 2011 on Monday as investors’ faith in factors underpinning a bull run in markets began to crumble. [MKTS/GLOB]

Gold is seen as a safe-haven investment due to its ability to retain value even at times of financial or political uncertainty. It is also used as a hedge against inflation.

Last week, the U.S. Federal Reserve kept interest rates unchanged but said inflation likely would rise this year and hinted at “further gradual” rate increases.

The yellow metal is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.

Spot gold may retest a resistance at $1,354 as it seems to have stabilised around a support at $1,326 per ounce, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.9 percent to $16.89 per ounce. It fell 3.7 percent on Friday in its biggest one-day decline since December 2016.

Platinum gained 0.6 percent to $995.60 per ounce, while Palladium was down 1.4 percent to $1,015.40 per ounce after touching its lowest since Dec. 14, 2017.

“The PGMs (platinum group metals) are certainly going to benefit from the better economic backdrop we’re now seeing in 2018. In fact, I think the rest of the complex will certainly outperform gold in the medium term,” Hynes said.

Palladium rose to an all-time high of $1,138 on Jan. 15 on higher automotive demand and supply shortage.

Reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Subhranshu Sahu (Reuters)

Published in Economy
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