Steady policy ‘gift’ boosts miners

THE JSE’s gold miners index increased almost 6% yesterday, as local mining companies benefited from the Bank of Japan’s decision to hold interest rates steady.

THE JSE’s gold miners index jumped nearly 6% yesterday, as local miners benefited from the Bank of Japan’s decision to hold interest rates steady.

The index was led higher by AngloGold Ashanti, which rose 6.15% to R220.10, followed by Harmony’s 6.11% to R47.74, and DRDGold’s 6.02% to R7.04.

Standard Bank retail investing director Paul Hansen said the fact that the US Federal Reserve (Fed) and the Bank of Japan had held policy steady also helped the gold price and by association, those of other precious metals.

The Fed left interest rates unchanged on Wednesday night and showed little sign that it was in a hurry to raise rates.

The platinum price was “impressively holding up” a fairly crucial level of $1,000/oz, which it breached quite recently, and was up 1.4% yesterday to $1,035/oz, close to a high for the year, Mr Hansen said. “So, it does appear as if the commodity rally still has legs. The uptrend appears to be firmly intact.”

All in all, it was looking good for the JSE resources index and the all share, Mr Hansen said.

Vunani Private Clients trader Rob Pietropaolo said the recent broader commodities rally had been driven largely by improved hopes in Chinese demand, as well as dollar weakness.

A more dovish Fed recently had helped maintain a soft dollar, which was usually supportive of commodity prices, he said.

“As far as our miners are concerned, we should expect an increase in production as the gold and platinum prices remain at elevated levels,” Pietropaolo said. SA’s gold and platinum miners were quite leveraged, so any spike in the gold and platinum prices should see them move sharply higher in the short term. How long the run would last was anybody’s guess, but the longer fundamentals had to change substantially for the rally to be sustainable, he said.

Bloomberg reported yesterday that a day before Japan started its Golden Week holidays, central bank governor Haruhiko Kuroda handed a surprise gift to bullion investors.

The metal for immediate delivery rose as much as 1.1% to $1,259.25/oz in London. Before the Bank of Japan decision, prices had been down as much as 0.6%, with gold jumping more than $10 in the 20 minutes following its announcement.