Gold and platinum mining shares experienced another day of robust gains on the Johannesburg Stock Exchange (JSE), as investors sought refuge in precious metals amidst geopolitical tensions and surprising economic performances from major global players like the US and China.
Yesterday, Impala Platinum Holdings saw its shares surge by 4.9%, Sibanye-Stillwater’s precious metals miner shares were up by the same margin, Anglo American Platinum climbed by 3.7%, Northam Platinum Holdings by 3.9%, and African Rainbow Minerals by 4.6%. These increases mirrored substantial upticks in the prices of their underlying commodities since the beginning of the year.
The price of gold, for instance, skyrocketed by 16.1% to $2,339.24 (R43,222) per ounce yesterday from $2,013.43 per ounce on December 2, 2023. Meanwhile, the spot price of platinum surged by 6.6% over just a few days, from $930.80 per ounce on Friday to $993 yesterday. Palladium, another platinum group metal, climbed to $1,061.58 from $995.66 per ounce on Friday. However, platinum group metal prices remained below the peak reached in April of the previous year.
According to Seleho Tsatsi, an investment manager at Anchor Capital, platinum, palladium, and rhodium typically account for more than 80% of revenue for platinum miners. Tsatsi noted a recent uptick in these metals’ prices, with platinum, palladium, and rhodium increasing by 7%, 4%, and 5%, respectively, over the past month.
Dr. Chris Harmse, a consulting economist at Sequoia Capital Management, attributed the rise in precious metals prices to three main factors. Firstly, he pointed to the stronger-than-anticipated US economy, which was bolstered by a positive jobs report indicating potential interest rate hikes by the US Federal Reserve. Secondly, the unexpected strength of the Chinese economy, with GDP expectations now at 5%, compared to 4% at the start of the year, was also a contributing factor. Thirdly, the surge in oil prices, up by about $10 a barrel in recent weeks due to geopolitical uncertainties, further drove up commodity prices.
Stephan Erasmus, an investment analyst at Anchor, highlighted the influence of various factors on gold price dynamics in 2024. He emphasized non-traditional investment avenues, central bank purchases, and non-monetary demand as key drivers. Erasmus noted that central banks, particularly the People’s Bank of China, significantly bolstered gold prices through purchases, reflecting bullish sentiment towards gold despite its price rise.
In conclusion, amidst global economic and political uncertainties, gold and platinum mining shares continue to surge, driven by their perceived safe-haven status and increasing demand influenced by a variety of factors on the global stage.
This surge underscores investors’ ongoing faith in precious metals as a reliable store of value during turbulent times, further solidifying their position as key assets in diversified investment portfolios.
