South African gold shares propelled the domestic bourse to close at a new life high on Thursday, as investors snapped up physical gold on dollar weakness and heightened global political tensions.
Overseas bourses wobbled as investors took their cash out of stocks and sought a safe haven in gold in a spree that lifted domestic precious metals’ counters to record highs during the day.
Gold’s safe-haven status has swivelled sharply back into focus as fears mount of a war between nuclear-armed India and Pakistan, Middle East violence and U.S. warnings of another terror attack.
South Africa’s largest producer AngloGold rose 3.2 percent or 21 rand to close at 667 rand, off an earlier fresh high of 676 rand.
Gold Fields, the country’s number two producer, roared to a new high of 171.50 rand, a 193 percent gain since the beginning of the year, before settling to close at 168 rand.
Investors in African Rainbow Minerals Gold (ARMgold) watched in glee as the Johannesburg bourse newcomer rose three percent or 170 cents to 56.90, a 30 percent rise since its listing on May 16. It closed 1.4 percent higher at 56.99 rand.
The enthusiasm flowed into mining giant Anglo American, a market bellwether, which rose 3.1 percent or 561 cents to close at 186.30 rand.
Some dealers see room for more growth in gold counters on Thursday, but for others a little caution is creeping in.
”The markets has been hugely bouyant, and it might take a breather tomorrow,” said Greg Potter at BOE Securities. ”But if the dollar weakens further then there’s no stopping it.”
The dollar has shown broad weakness in recent weeks on concerns over the performance of U.S. assets and on the relative pace of a U.S. economic recovery. Worries about further attacks on U.S. soil following September 11 have also reduced the appeal of the currency.
Most other stocks paled in comparison to gold counters.
Fragile financial stocks suffered on the back of worse-than-expected producer inflation data. FirstRand shaved 1.8 percent or 15 cents to close at 831 cents, broadly in line with the banks index.
”The PPI figures were worse than expected, and we’re seeing a bit of selling in the financials,” said one dealer.
South Africa’s all-commodities producer price index (PPI) rose by 14.8 percent in the year to April, compared to 14.1 percent in March. A Reuters consensus poll of economists had forecast PPI would rise 14.3 percent year-on-year.
The figures added to a slew of data suggesting the central bank will raise interest rates for a third time this year when its Monetary Policy Committee next meets in June. – Reuters