As gold’s relentless rally continues to defy expectations, SA’s major gold miners are back in the limelight and have recorded double-digit share price gains since the start of the year.
The price of gold was about $2,910/oz on Tuesday, a level that Swiss investment bank UBS predicted late last year would only happen well into the second half.
Over the past 12 months, bullion has gained 44% as economic uncertainty and geopolitical tension drove a surge in safe haven demand among central banks and investors. Gold’s rally has accelerated in recent months as US President Donald Trump’s tariff threats added to the uncertainty in financial markets.
As a result, JSE investors have flocked to SA’s largest gold miners in the first six weeks of 2025, in anticipation that the soaring price will boost miners’ earnings in the coming months.
Since the start of the year, the three largest gold mining companies on the JSE have each seen their share prices increase by nearly 50%, adding a combined R200bn in value over the period.
AngloGold Ashanti and Gold Fields saw their shares gain about 45% while Harmony Gold shares are up by more than half since the start of the year. Among the smaller gold producers, Sibanye-Stillwater and DRDGold have gained about a quarter in value since December.
The rising gold price last year saw SA gold producers reporting improvements in their financial performances, particularly among the largest miners.
AngloGold’s latest results for the first three quarters showed that the group’s core earnings for the nine months to end-September more than doubled to $1.863bn, despite gold production being relatively unchanged.
Additionally, a trading update by Gold Fields cited gold prices as a primary driver behind its annual results. The group expects to report headline earnings of $1.28-$1.38 per share for the 12 months to end-December, an increase of 36%-47% from the previous year.
According to the latest market insights from the World Gold Council, gold’s strong performance in January was primarily supported by a weaker US dollar.
Gold’s relationship to the dollar has been consistently negative over the past few decades. A stronger greenback makes dollar-backed assets such as US bonds more attractive to investors seeking to hedge against uncertainty, shifting the focus away from gold.
As a strengthening euro and Trump’s tariff threats are expected to weaken the dollar, the World Gold Council predicts that gold will continue to rally throughout this year, with big banks, including Goldman Sachs, Barclays and JPMorgan forecasting a price of $3,000/oz by year-end.
While gold’s momentum is expected to slow compared to last year there is some upside risk, particularly from stronger-than-expected central bank demand.
“The big upside risk on the central bank side is if we see more instability, more weaponisation and greater use of tariffs or sanctions that dissuade people from engaging with the US, which might accelerate the move by central banks to hold more gold,” said World Gold Council market strategist John Reade.
However, while dollar weakness will still act as a tailwind for gold, the latest rally has seen gold prices breaking from their traditional inverse relationship with US bond yields — a notable difference between gold’s performance over the past three years and in previous rallies.
“If you fast forward to the beginning of 2025 it’s very clear that relationship no longer applies. Gold has been strong despite higher real yields and nominal yields in the US and a strong US dollar. Something has clearly changed,” Reade told Business Day.
The US dollar has been the most important reserve currency for the past few decades, he said, but the weaponisation of the dollar in recent years and concerns around the country’s unsustainable debt burden have threatened its dominance, with Trump’s potentially inflationary policies adding to the uncertainty.
The current rally began in 2022 after the US froze Russia’s central bank assets after its invasion of Ukraine, resulting in a big increase in the rate of gold purchases by central banks.
That has continued through 2024, with three consecutive years of more than 1,000 tonnes of central bank gold purchases — more than double the rate recorded in 2010-21.
“Gold is reacting to the big increase in geopolitical risk, not only from the war in Ukraine or the Middle East but also from the first signs of what could be the end of US economic hegemony,” Reade said.
Based on the “relatively frenetic and chaotic policies” launched by Trump within the first few weeks of his presidency, the factors that encouraged central banks and investors to increase their rate of gold purchases last year are likely to intensify under the new US administration, he said.
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