Gold pierces $5,000/oz and the rand hits 42-month highs, raising chances of a Sarb rate cut this week. (Photo: Unsplash) 
Gold’s astonishing run has taken it past another milestone with the precious metal’s price vaulting $5,000 an ounce for the first time this past weekend – and it’s taking the rand along on the ride.
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The rand on Monday was flirting with 16.0/dlr, its best level since June 2022, as the prospects of another US government shutdown left the greenback reeling, triggering a fresh flight of investors into the safe haven of gold.
Gold on Monday reached $5,100 an ounce, a clear indication that its breaching of $5,000 was an emphatic move. Gold’s rally has been nothing short of breathtaking: it hit both the $3,000 an ounce and $4,000 an ounce levels in 2025, driven by mounting uncertainty and geopolitical tensions fanned in large part by the second Trump administration in the US.
What this means for you
A rate cut this week is not set in stone but the prospects of the Sarb cutting – or releasing a dovish statement – have risen significantly over the past week. The rand does seem to be hitting some “technical resistance” at the 16.0/dlr level but this suggests that a decisive break there could open the path to further rand gains which in turn help to contain inflationary pressures. The bottom line is that there is a growing chance of a cut this week which would take the repo rate to 6.50% and the prime lending rate to 10.00%.
For South Africa, the silver lining has been a rand rally, and this week the raised prospects that the Reserve Bank’s Monetary Policy Committee (MPC) may cut when it makes its next interest rate decision on Thursday.
“Financial markets have priced in a 44% probability of a 25 basis point cut occurring in the repo rate at this week’s MPC meeting, still below 50% likelihood, but up from only a 20% probability a week ago, as the rand continues to gain,” said Investec chief economist Annabel Bishop.
“The gold price has convincingly pierced the $5,000 mark, aiding rand strength, with precious metals (including platinum), South Africa’s key export, and gold benefiting in an environment with high geopolitical tensions.”
Gold’s latest surge was reflected on Monday in the share price of South African producers, with both Harmony and Sibanye-Stillwater adding over 2% and Gold Fields climbing around 5%. The stronger rand is a double-edged sword for them as their cost base is largely in the domestic currency, while gold is priced in dollars.
It all makes for an interesting week ahead for South African markets. DM