South Africa’s rand rose against the dollar for a
second day after the price of gold climbed to an 11- week
high as mounting tension in the Middle East boosted the appeal
of the precious metal as a safe haven asset.
Gold, which rivals platinum as South Africa’s biggest
export earner, climbed to the highest level since Oct. 10
after Israel expanded its bombing of the Hamas-controlled
Gaza Strip. The attacks raised concern oil supplies from the
Middle East, which produces almost a third of the world’s
crude, may be disrupted, prompting investors to purchase gold
as a hedge against inflation.
“There’s quite a strong correlation between the
rand and the gold price, and that’s helping the currency
in a thinly traded market,” said Kimon Boyiatjis, a
hedge-fund manager in Cape Town at Trident Capital. “South
Africa is one of the world’s biggest gold producers,
so a stronger bullion price is very positive for us from an
export point of view.”
The rand advanced as much as 1.5 percent to 9.5683 per dollar,
the strongest level since Dec. 24. It traded at 9.5758 by
9:45 a.m. in Johannesburg from 9.7150 at the end of last week.
It strengthened versus 10 of the 16 most-actively traded currencies
monitored by Bloomberg, adding most against the Brazilian
real. Against the euro it slipped 0.1 percent to 13.6432.
March Record
The currency may strengthen to between 9 and 8.60 per dollar
“pretty swiftly,” according to Boyiatjis.
Gold for immediate delivery gained as much as 2.4 percent
to $890.49 an ounce as Israel authorized the call-up of 7,000
army reservists, raising concern it may launch a ground invasion
of Gaza. Bullion, which reached a record $1,032.70 an ounce
in March, rose 3.7 percent last week, the third straight weekly
advance.
