GOLD fell as much as 2,2% to 1136,20/oz yesterday after the dollar rose to a five-week high against the euro and strengthened against other currencies on better than expected US jobs data.
The greenback was also the major driver behind SA’s top 40 shares falling more than 2% and the local currency depreciating.
The dollar has been depressed for much of this year due to a view that US interest rates will remain low, while rates in other markets, particularly faster-growing emerging markets, will rise.
Imara SP Reid’s Kevin Alego said lower share prices in SA and the falling gold price were largely an “overhang of surprisingly good jobs data in the US”, and the US currency rising as a result.
Friday’s better than expected nonfarm payrolls data had started speculation that the US Federal Reserve may lift interest rates from historic lows sooner rather than later, which could help the dollar and cut support for gold.
The rand lost as much as 1,3% to R7,51/ yesterday. The FTSE/JSE’s all share index ended 0,9% lower.
Gold was trading at 1161,40/oz yesterday evening.
A Reuters poll of 33 traders and 18 fund managers had predicted profit-taking would take gold below 1200/oz before year- end, but most expected a recovery above 1200 next year because the dollar was likely to weaken due to investor diversification into alternative currencies.
US gold commentator Jeffrey Nichols, in a speech to the fourth China Gold and Precious Metals Summit in Shanghai last week, was even more bullish.
He predicted gold could reach 2000-3000/oz in the next few years on expansive US monetary policy and fresh interest from central banks and new geographies such as China. With Reuters
