Rand, bonds gain as gold goes up

The rand and local bonds firmed on Wednesday as commodity prices paused their recent descent, with gold up nearly 2% as markets await the minutes of the latest US Federal Reserve meeting.

Gold gained the most since early March on Wednesday and at 6.50pm was up 1.89% to $1,792.83 an ounce while platinum was up 1.18% to $1,021.

The gains come as commodity prices have fallen in recent months on concerns about China’s economy, which has suffered myriad problems including energy shortages.

China is the biggest importer of SA commodities.

At 7pm, the rand had firmed the most in almost two weeks and was 1.14% stronger at R14.7998/$. It also gained 0.69% to R17.1381/€ and 0.7% to R20.1993/£. The R2030 government bond was also stronger, with the yield falling 18 basis points to 9.39%. Bond yields move inversely to their prices.

While the JSE all share ended little changed at 66,012 points, precious metals and miners were the day’s standout performers with their index gaining 1.86%.

AngloGold Ashanti gained the most in a week, rising 3.16% to R280.04, while DRDGold leapt 7.7% the most since mid-May to R13.42. Pan African Resources was up 4.91% to R3.42, Gold Fields rose 2.81% to R140.13 and Harmony added 2.64% to R56.02.

Anglo American Platinum led the gains in its sector, jumping 3.34% to R1,593.21, while Royal Bafokeng Platinum rose 2.56% to R93.51.

Markets were looking to the minutes from the Fed meeting for its thoughts on prices. The central bank has said for several months that inflation in the world’s biggest economy is likely to be transitory, but concern is growing that prices are remaining persistently high.

“Rising food prices, energy costs, utilities, and new vehicles all confirmed what every American already knows ... inflation remains elevated,” said Oanda senior market analyst Edward Moya. “Core inflation [has] mostly steadied but that was weighed down again over weakness in travel. The transitory argument is weakening and that trend will continue to move forward Fed rate-hike expectations.”

Investors will be scrutinising the minutes for clues on when the Fed is likely to begin tapering its bond-buying programme, with analysts now predicting December after most thought the taper would begin in November.