South African gold companies showed strong results on the Johannesburg Stock Exchange (JSE) on Friday. Sibanye-Stillwater shares rose by 8%, reaching R51.31, Pan African Resources increased by 5.6% to R29.58, and DRDGOLD climbed by 5.5% to R50.11 by the end of the morning.
These positive changes occurred as the price of gold remained above the $4500 per ounce mark after a sharp rise earlier in the week. According to Trading Economics, gold traded above $4500 per ounce on Friday and was heading for its third consecutive weekly gain.
Investors turned to safe-haven metals amid increased volatility in currency and bond markets, while rising oil prices continued to highlight inflationary risks, as explained by Trading Economics. Goldprice.org recorded the metal's price at $4584.56 per ounce, representing a 1.58% increase over 30 days, while currency strategist Andre Sellier of TreasuryONE noted that gold grew by 11% in August.
Export Revenues
Sellier pointed out that the metal is supported by decreasing expectations of interest rate hikes in the US, a weakening dollar, and steady purchases by central banks. Figures provided by him from Morgan Stanley indicate that China purchased 60 tons of gold this year, and Poland added 82 tons.
The strength of gold is particularly important for South Africa due to the contribution of precious metals to the country's export revenues and trade conditions. Nkosinatsi Nsibande, a portfolio manager at Abax Investments, stated that the movement of gold above $4400 per ounce provided significant support to South Africa's trade conditions.
The higher gold price also coincided with the strengthening of the rand. Sellier reported that the rand traded at approximately 16.06 against the dollar, aided by a weaker US dollar and generally stronger emerging market and commodity currencies. Nsibande suggested that the recent rise in the rand was largely driven by the weakening dollar, weaker US economic data, and the rise in gold prices.
The latest move in gold followed a sharp jump earlier in the week. Trading Economics reported that the metal rose by more than 4% on Wednesday after the US Treasury announced plans to at least double the purchase of long-term bonds, which led to lower treasury yields and the dollar.
Various Forecasts
Major firms such as JP Morgan Global Research point to the possibility of prices rising to $6000 per ounce if macroeconomic headwinds ease, whereas the consensus of the London Bullion Market Association centers closer to $4500 per ounce.
JP Morgan Global Research analysts forecast that gold could reach the $6000 per ounce mark by the end of the year, as the outlook for 2026 and 2027 remains above current levels. However, ING has adjusted its expectations downwards, forecasting an average of $4300 per ounce in the third quarter and $4600 per ounce in the last three months of the year.