MARKET WRAP: Platinum miners erase 2020 loses despite still-lower metal price
The gold price has breached the psychologically important $1,800/oz, its highest level since 2011, as investors continue to pile into safe havens
Platinum miners led gains on the JSE on Wednesday, with the index now having erased all of its 2020 losses, while the gold price broke above the psychologically important $1,800/oz as a resurgence in Covid-19 cases continues to drive skittish markets.
Platinum miners hit a multi-year trough on March 19, when the world came to the realisation of just how big an effect the Covid-19 pandemic was going to have on global economies. Since then, however, the index has risen steadily both on safe-haven demand and a ramping up of economic activity.
As the world battles with uncertainty surrounding the pandemic, hawks have rushed into gold, pushing the spot price above the psychologically important $1,800/oz, its highest level since 2011.
“The gold price is striving towards a new all-time high, while [other] commodity prices are in the process of recovering from their collapse in March, as optimism, if patchy, continues to build on the global recovery,” said Investec chief economist Annabel Bishop.
Bishop said the gold price was well up from a year ago, with some of the gains coming from dollar weakness and risk aversion.
The JSE all share ended on Wednesday up 1.13% to 55,870.69 points and the top 40 rose 1.25%. Platinum miners leapt 5.82%, banks 4.21% and gold miners 3.49%.
Impala led gains in the platinum sector, leaping 9.56% to R136.57, with Sibanye-Stillwater and Northam both up 5.25% to R41.28 and R130, respectively. Anglo American Platinum tacked on 2.86% to R1,367.98 and Royal Bafokeng 0.95% to R37.
Gold gained 0.92% to $1,810.93/oz and platinum 1.65% to $850.62/oz. Brent crude was up 0.14% to $43.08 a barrel. Gold has gained about 19% in 2020, while platinum is down about 12%.
The JSE was boosted by encouraging comments from US Federal Reserve vice-chair Richard Clarida, who told CNN on Tuesday that the central bank still has more room to support the world’s largest economy as the number of new coronavirus infections continues to rise.
“The US Federal Reserve has repeatedly reiterated that it stands ready to act and Loretta Mester [president and CEO] added her voice to those warning of a levelling off in the economic rebound as case numbers rise,” said Oanda senior market analyst Craig Erlam.
“This may prove to be supportive to these equity markets just as they're looking a little vulnerable and ensure the dips are still attracting buyers. I guess we'll soon see whether that’s enough as the cracks are appearing at a time when there is a huge gap between stock markets and reality,” said Erlam.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.