Business
Rand Strengthens as Gold Hits Record High Amid Trump vs Fed Turmoil
The South African rand opened firmer on Tuesday, trading at R18.66 to the US dollar, as gold prices surged to a record high, driven by growing investor anxiety over political interference in the U.S. Federal Reserve.
The local currency gained 1.1% over the long weekend, clawing back substantial ground from its April 9 low of R19.93, which was recorded just before President Donald Trump paused planned tariffs.
Global Uncertainty Boosts Emerging Market Currencies
According to Andre Cilliers, currency strategist at TreasuryONE, the firmer rand is riding on a combination of factors: a weaker US dollar, stronger emerging market sentiment, and the global rush toward safe-haven assets like gold.
“The rand is trading firmer this morning on the back of the weaker dollar and soaring gold price,” said Cilliers. “Emerging market currencies are all showing decent gains despite the uncertainty in markets.”
Gold Hits Record as Market Fears Escalate
Gold breached yet another record on Tuesday, hitting $3,457 (R64,508) per ounce as investors seek shelter amid increasing global market turbulence.
Linh Tran, market analyst at XS.com, attributed the rally to three driving forces:
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Expectations of monetary easing from the Fed
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Escalating trade tensions between the U.S. and China
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Geopolitical risks, including the war in Ukraine
Trump’s Fed Attacks Raise Red Flags
Investor anxiety has intensified over fresh reports that President Donald Trump may try to remove Fed Chair Jerome Powell. After Powell warned that Trump’s aggressive tariffs could lead to higher inflation, Trump retaliated with scathing remarks—calling Powell a “major loser” and suggesting his removal “cannot come fast enough.”
“Were Powell to be fired, the initial reaction would be a huge injection of volatility,” warned Michael Brown, strategist at Pepperstone. “It would trigger a mass sell-off of U.S. assets and potentially shake the foundation of the global financial system.”
Markets Start Week in the Red
Global markets kicked off the week under pressure.
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In the U.S., the S&P 500 dropped 2.4% on Monday.
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Asian stocks posted mixed results, with Tokyo’s Nikkei 225 down 0.1% and Shanghai’s Composite up 0.3%.
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Brent crude traded flat at $66.64, as traders remained cautious.
“Trade tensions and potential leadership changes at the Fed are driving investor unease,” said Bianca Botes, Director at Citadel Global.
High Volatility Ahead
With Trump intensifying his rhetoric against Powell and fears of central bank interference growing, analysts warn that more market instability may lie ahead. While gold continues to shine, the bigger question is how long confidence in U.S. institutions can hold.
For South Africa, a stronger rand and high gold prices offer a rare bright spot in a jittery global landscape—but the winds could shift quickly.
{Source: IOL}
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