Gold and platinum stocks racked up gains on the South African bourse early on Tuesday, fuelled by precious metals prices, with gold appearing set to test the $320 an ounce level this week, dealers said.
South Africa’s largest producer AngloGold rose 2,08% or R13 to R638, and rival Gold Fields notched up 1,92% or 290 cents to R154.
Gold opened above $315,50 an ounce in Europe, well above the Monday European close of $312,40/312,90, and close to its highest since February 2000 hit overnight in New York.
The price of bullion breached $316 an ounce on Monday on dollar weakness and Middle East concerns, dealers said. ”I think we’ll test $320 later in the week,” said Peter Tse, a dealer at Scotia Mocatta in Hong Kong.
But dealers sounded a note of caution.
”With significant increases in the price of gold, the faster the rate increases, the faster demand stops. I would not be surprised if we see a pull back,” said Julian Henry, a trader at Barnard Jacobs Mellet.
Indices’ data was not available due to a technical problem at the JSE Securities Exchange.
Platinum stocks also showed gains, as the price of the white metal held firm. Impala Platinum added 1,56% or R10 to R650, after slipping on Monday on a resilient rand.
Resources and dual-listed stocks gain when the rand is weaker, because most earn in foreign currency and pay their costs in rands. The reverse is true when the rand strengthens.
But platinum stocks broke through the strong rand on Tuesday. ”We’re starting to see the platinum price creeping up and the platinum counters are reacting,” said Henry.
Investors also admired South African industrial brand management group Barloworld’s results, after reporting a 28% jump in half-year headline earnings per share on Tuesday. Its share was 0,74% or 50 cents higher at R68,50.
Investors will also keep a keen eye on April consumer inflation data due at 0930 GMT. A Reuters consensus forecast has predicted an annual increase of 8,7% in CPIX, which could point to an interest rate increase.
A rate increase is expected when the central bank meets next month, but it’s the size that is causing concern.
”There’s definitely a feeling that rates will increase. Any numbers that reflect upside risk could have an effect, especially on banking and financial stocks,” said one trader. – Reuters