Gold is glittering on the JSE, especially in the past year, brightened by the allure of the precious metal whose price has remained elevated as a haven investment on the back of high interest rates, and currency volatility.
Gold stocks on the JSE include Harmony, Pan African, DRDGold, Anglo Gold Ashanti, and Sibanye-Stillwater.
According to Saqib Iqbal, a financial analyst at Tradequotex, the gold price has “increased by more than 15% this year” while the “bullish momentum can continue due to geopolitical tensions and anticipated US rate cuts”.
There is stronger sentiment that the yellow metal can rise above $2 400 (R43 138) per ounce by the end of the year. Yesterday, gold rose 0.3% to $2 380 per ounce.
This gold momentum has been providing support for JSE gold stocks that have been elevated in the one year comparative. Harmony Gold’s stock for the one year mark was up by 130.81% by afternoon trade yesterday at around R176.63.
Despite trading weaker by about 1% yesterday, AngloGold Ashanti was up a significant 36.71% to R517.16 over the year.
Gold Fields equally stronger over the same period, rising 12.61% to R291 while Pan African Resources was up by a massive 103.88% for the year at R6.40 per share.
Stephan Erasmus, investment analyst at Anchor Capital, told Business Report in an interview yesterday, that gold has been “outperforming most major asset classes, driven by central bank purchases, Asian investment inflows, strong consumer demand, and geopolitical” uncertainty.
“The global economy shows mixed-growth signals, anticipating rate cuts amid persistent inflation, and the gold price reflects these expectations,” Erasmus said.
“Potential catalysts for gold include falling rates in developed markets and continued global investor support as a hedge against rising risks,” he said.
However, the big question on gold stocks investors’ minds at the moment is whether gold’s momentum will continue or wane.
Recent World Gold Council research shows that global central banks plan to continue buying gold, with 29% of respondents indicating they will do so over the next 12 months.
However, China’s gold purchases have slowed significantly in recent months. In June, the People’s Bank of China refrained from adding gold to its reserves for a second month.
Erasmus said downside risks remained, including a drop in central banks’ demand or profit-taking by Asian investors.
Although the other gold stocks on the JSE have been on a rally over the year, DRDGold, which slumped 1.31% in afternoon trade was also down by 8.93% in the one year comparative.
“(I’ve) been quite chuffed with the recent performance of AngloGold Ashanti but looking at the one year chart it is still lagging the sector’s top counters,” said market analyst Martin Rogers.
In the past seven days and 30 days, AngloGold is up by some 10% and 14%, respectively. Over the past half-year, the gold miner’s shares are stronger by a significant 26.26%.
BUSINESS REPORT