JSE soars with gold price at 25-year high :: Namibia Internet Gateway cc ::

Articles: JSE soars with gold price at 25-year high

Posted by admin on Friday, March 31, 2006 - 08:05 AM

GOLD climbed to its highest level in 25 years yesterday, propelling the JSE to a fresh record, as the dollar weakened and the prices of other precious metals surged to new highs.
Ayanda Shezi

Although some profit-taking was expected in the short-term, analysts said yesterday, the trend remained upward for precious metals. “Further gains from here may prove a little difficult as Japanese investors will be looking to take profit from the rally ahead of their year-end (today),” said Rennies Bank forex dealer Lee Naisbitt. Gold changed hands at $580,54/oz yesterday, its highest level since January 1981, and up 1,2% from its previous close. Since the beginning of this month, the metal is up 3%. The metal was also boosted by oil prices trading above $66 a barrel on concerns over Iran and its nuclear programme. “The outlook remains positive for gold, as there is a lot of uncertainty with regard to the direction of the dollar, as well as uncertainty about the monetary policy direction of both the Fed and the European Central Bank (ECB),” said Absa economist Monale Ratsoma. He said gold could go as high as $650/oz if current fundamentals prevailed throughout the year. Last year, gold rose 18% partly as investors bought the metal as a hedge against inflation as oil prices traded at record highs. The higher bullion price lifted the rand, as well as the local equity market. The rand gained 2% from its previous close, and was trading at R6,19 to the dollar in late afternoon trade. “The rand, as a commodity-based currency, should benefit from the surge in precious metals’ prices as it has in recent times,” said Ratsoma. Gold and platinum together account for about 20% of South African exports, and a rise in these precious metals is generally positive for the currency. The rand was also buoyed by a stronger euro. The euro gained against the greenback for a second day yesterday, on speculation that the ECB will raise interest rates three more times this year, outpacing the US Fed and narrowing the US rate gap. The euro was also buoyed by reports showing that business confidence in Germany, Europe’s largest economy, rose to a 15-year peak and executive sentiment in Italy was at its highest in five years. The JSE’s all share index climbed to a new record high, and was seen up 1,7% at 20678 in intraday trade. SA’s third-biggest mining company, Harmony Gold, surged 5,2% to R101,50, while Implats, the world second-biggest platinum producer, was up 2,7% to R1197/oz. The gold index gained 4% to 2886, while resources were up 2,4% at 35342. Gold was quoted at $583,30/oz when the JSE closed yesterday. With Bloomberg

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