Reminiscent of bygone days, the South African rand took its cue from a stronger gold price on Friday, surging to a fresh 15-month best level of R8,7490 against the dollar as the bullion price bulleted to a three-year high.
On the back of a weaker dollar, lower equity markets and ongoing tension over Iraq, gold firmed to $335.65 a troy ounce on Friday, providing further support for a seemingly unstoppable rand, which has appreciated by 37% since the beginning of the year — making it the world’s best performing currency.
Since last December when it collapsed to an all-time worst level of R13,86 to the dollar, the rand has appreciated a whopping 58,4%.
On Friday alone, the local currency gained more than 16 cents against the dollar.
At 1200 local time the rand, having retraced slightly, was trading at R8,8040 to the dollar — still 10 cents firmer than its overnight close in New York of R8,9010.
It was also strong against the other major currencies — at R13,8836 against the British pound (sterling) off a previous close of R13,9425, and at R8,9427 against the euro compared with R8,9845 on Thursday.
“The rand is surging on the stronger precious metal prices and should break below the R8,70 per dollar level today,” said a currency trader.
A surge in the platinum price also added impetus to the surge by the rand.
The platinum price was last at $600 an ounce and the gold price was at $334.50 an ounce, its highest level since October 1999.
The gold price closed at $323.35/oz on Wednesday, but surged in late US trade on Thursday to close at $331.45/oz on renewed war jitters over Iraq.
Dealers see the next key technical resistance level at R8,70 rand per dollar, but that if this is breached, then the next key level is R8,60. – I-Net Bridge