JSE rises as gold price approaches $1,500/oz

The JSE was a little higher on Wednesday morning, with gold miners offsetting losses by banks, as the price of the precious metal continued its climb.

Gold is at a record high in rand terms, while the precious metal is also looking set to breach the $1,500/oz level for the first time in six years.

Investor interest in the midst of an escalating US-China trade war, as well as expectations of looser global monetary policy, has boosted gold, which earlier touched an intraday high of $1,491/oz.

Gold, which is seen as a hedge against inflation and loose monetary policy, has received a further boost by a surprise 50 basis points interest-rate cut in New Zealand earlier.

At 10am the all share was 0.3% firmer at 55,227.2 points and the top 40 was 0.33% up. Gold miners had risen 3.87% and platinums 2.84%.

JSE listed gold miners have added 21.27% so far in August while local banks have fallen 4.59%. Technical indicators suggest that banks are oversold, with Bloomberg data showing that the 14-day relative strength index (RSI) for these stocks remains below 30.

Gold was up 0.79% to $1,485/oz and platinum 0.58% to $855.60. Brent crude was 0.55% higher at $58.92 a barrel.

The rand was a little firmer, having almost breached R15/$ on Tuesday, after Moody’s Investors Service issued a report warning that a turnaround plan for Eskom was urgently needed.

The rand remains exceptionally vulnerable because of the dismal local fundamentals and especially with regard to the state of state-owned enterprises, with no signs of a tangible turnaround strategy from the government, said Nedbank Corporate and Investment Banking Reezwana Sumad in a note.

There was also a state of global caution regarding emerging markets and commodity currencies, Sumad said.

Global focus is on the US-China trade war, as well as the prospects of looser monetary policy, with two US Federal Reserve officials saying on Tuesday an uncertain trade outlook may warrant further interest-rate cuts. According to Dow Jones Newswires, both said it was premature to say when or how aggressively the Fed should cut.

Glencore gave back 1.93% to R41.25 It said earlier that adjusted earnings before interest, tax, depreciation and amortisation (ebitda) fell 32% to $5.6bn in the half year to end-June, largely as a result of the underperformance of its African copper operations.

Italtile gave back 3.85% to R12.50. It said earlier that it expected headline earnings per share to rise between 6% and 8% in the year to end-June.

Mpact rose 6.37% to R19.70. It said earlier that revenue for the six months to end-June rose 4.2% to R5.2bn, with the paper and plastics packaging group upping its interim dividend 20% to 18c.

[email protected]