JOHANNESBURG, Dec 16 – The South African rand gained in early trade on Monday, supported by firmer gold prices as investors turned their attention to the final round of economic data releases for the year.
At 0701 GMT, the rand traded at 16.84 against the dollar, about 0.2% stronger than its previous close.
Gold prices held near a more than seven-week high, buoyed by a weaker U.S. dollar and lower U.S. Treasury yields. As a major producer of precious metals, South Africa often benefits from stronger bullion prices, which tend to support the local currency.
“Through the past week, the rand was able to capitalise on weaker dollar sentiment,” ETM Analytics said in a research note.
“As the dollar remained in a weaker trend, the rand sustained the break below 16.90 and opened the door for further appreciation.”
ETM Analytics added that, from a technical perspective, the rand could test levels in the 16.60 range before the end of the year, reinforcing the momentum that has driven its gains in recent months.
Locally focused investors are awaiting the South African Reserve Bank’s third-quarter bulletin, scheduled for release at 0800 GMT, which is expected to provide insight into quarterly foreign direct investment and portfolio flows.
Later in the week, market participants will also monitor November consumer inflation and producer inflation data for further clues on price pressures and monetary policy direction.
In the bond market, South Africa’s benchmark 2035 government bond strengthened in early trade, with yields falling 5 basis points to 8.39%.
