Gold miners see a light

January 12, 2015 09:29 AM

This story was written by Neo Khanyile of Bloomberg News. 

South African gold stocks rallied a sixth day in the longest stretch of gains since March as metal prices climbed on speculation that the U.S. may hold off on raising interest rates and debate on European stimulus intensified.

The five-member FTSE/JSE Africa Gold Mining Index gained 3.7% to 1,374.13 by 3:29 p.m. in Johannesburg, the highest since Sept. 15. That extended the gauge’s increase this year to 20%, while bullion futures rose to a one-month high today on the Comex market.

Investors in Africa’s biggest producer of bullion sought gold-related assets as U.S. data that showed falling wages added to speculation about when the Federal Reserve will raise lending rates. In Europe, South Africa’s biggest regional trading partner, debate over whether policy makers should add monetary stimulus to the economy intensified before its Jan. 22 meeting.

“Perhaps investors are switching out their safe-haven investments into gold, instead of the U.S. dollar,” Jonathan Bachrach, a money manager at Vunani Private Clients, which oversees about 600 million rand ($54 million), said in an e- mailed response to questions. “The anticipation of stimulus in Europe should lead to a higher gold price.”

Gold Fields Ltd. led gains by South Africa’s bullion stocks, rising 4.2% to 64.24 rand. Harmony Gold Mining Co. advanced 3.7% to 29.46 rand. The lone decliner on the index was Pan African Resources Ltd., which fell 2.4% to 2.07 rand to pare its 2015 gain to 6.7%.

“When the U.S. made use of quantitative easing, gold spiked and I think we’ll see a similar movement in gold because of Europe,” Bachrach said, referring to central bank monetary stimulus. “I believe the rally still has legs to run more.”

About the Author
Bloomberg reports that SA mines are raising output in response to higher commodity prices. National
mineral production rose 5.8% year-over-year in February percent in February.