South Africa’s index of gold-mining stocks surged the most this week on record as the precious metal traded near a one-month high and the rand extended declines.
The five-member FTSE/JSE Africa Gold Mining Index climbed 2 percent to 1,022.93 by the close in Johannesburg, bringing its five-day gain to 28 percent. Pan African Resources Plc led the advance on Friday, adding 3.8 percent to bring its gain this week to 17 percent. AngloGold Ashanti was the best performer in the week, gaining 33 percent. Spot gold advanced 0.5 percent to $1.158 an ounce, the highest since July 13.
The precious metal has climbed 3.8 percent this week as investors scaled back bets on a Federal Reserve rate increase next month and a stock and currency sell-off in emerging markets spurred demand for safe assets. South African gold miners also benefit from a weaker rand because they pay costs in the local currency while selling their exports for dollars, helping the index to rally from a 15-year low on August 6.
“The gold stocks, particularly South African gold stocks, were undervalued, not only relative to the global peer group, but to the local mining index as well,” Richard Hart, director of equity research at Arqaam Capital SA Pvt Ltd., said from Johannesburg. “This has really been a recovery of some of that value.”
Gold Fields Ltd., South Africa’s second-biggest producer, advanced 4.5 percent to bring its weekly gain to 31 percent, while Sibanye Gold Ltd. added 14 percent in the week, and Harmony Gold Mining Co. 6.5 percent.
Gold stocks are outperforming the benchmark JSE/FTSE Johannesburg All-Share Index, which has been battered by a slump in commodity prices and a slowdown in China, the biggest buyer of South African exports.
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