Golds rocket as soaring costs change picture

GOLD producers on the JSE rocketed on Friday — after plunging to decade lows as a steep fall in the spot price collided head on with soaring costs.

Gold Fields zipped up over 6.5% to R50.77, Harmony leapt 6.9% to R35.75 and AngloGold Ashanti added 4.3% to reach R139.98.

“You have seen a cocktail of bearish sentiment for gold for some time now, but gold equities this month have declined more than the gold price,” said David Davis, an investment analyst at SBG Securities. “Some investors are asking if it is not a good time to collect gold shares.”

At Thursday’s close, the spot gold price had lost over 13% in June while AngloGold had fallen 26% and Gold Fields 22%.

The JSE Top 40 index put in a fourth successive day of gains, adding 1.14% to 35 051. It remains almost 3 000 points off its lifetime high reached on May 31.

The All Share index climbed 1.27% to 39 578, following global shares which hit their highest level in a week as a volatile quarter drew to a close.

Aspen Pharmacare, Africa’s top generic drug-maker, was the biggest gainer on the Top 40 for a second session running, surging over 8% to R227.07.

The group announced it would pay $1-billion for drugs and a plant from US firm Merck, bolstering its presence in Europe, Latin America and Asia.

Trade was active, with 217 million shares changing hands. Advancers outnumbered decliners 203 to 92. Altogether 63 shares were unchanged.

The FTSE 100 share index fell to its first monthly loss in more than a year.

The blue-chip index, which raced to a 13-year high of 6 875.62 points in late May, fell 0.5% or 27.93 points to close at 6 215.47 points after markets took fright last week at the prospect of the US winding down its money-printing programme.

While the FTSE 100 is up 5% since the start of the year, it has fallen 10% from its peaks in late May and fell 5% this month.

US stocks were flat on Friday with investors finding little reason to push prices higher after a three-day rally on the S&P 500, which was on pace to end a sevenmonth rally.

Trading was volatile, with prices opening lower and falling steadily before rebounding.

Gold surged about 1% in choppy trade as heavy short-covering and book-squaring activities on the last trading day of a dismal second quarter lifted the metal after the previous session’s drop.

After Friday’s rally, gold is still headed for a 24% loss for the second quarter, its biggest quarterly decline since at least 1968. Spot gold was at $1 225/oz, and platinum was at $1 317/oz. — Reuters