Gold rally lifts emerging markets as miners, currencies, and confidence surge

The sharp rally in gold prices is fueling strong gains across emerging markets, lifting equities, currencies, and investor sentiment in key producers, Bloomberg reported on Sunday. South Africa’s bourse is on track for its best year in two decades, with gold miners Sibanye Stillwater, AngloGod Anshanti, and Gold Fields tripling in value this year.

“The rally in gold is beneficial for a small group of countries in emerging markets such as Uzbekistan, Ghana, and South Africa. The wider story of the rising gold price is that investors are increasingly looking for alternative investments away from the more traditional developed market currencies,” portfolio manager at William Blair Investment Management Daniel Wood told Bloomberg.

South Africa’s FTSE/JSE Africa All Share Index has climbed more than 30% this year, supported by a stronger rand and 10-year government yields falling below 9% for the first time since 2018. Softer inflation and recent rate cuts have further boosted confidence — marking a sharp turnaround for a market long held back by political uncertainty and power shortages.

Ghana — Africa’s top gold producer — has taken a more direct route to capture value from its gold output. The newly established GoldBod — a state gold-trading body launched in March — has generated roughly USD 8 bn in foreign exchange inflows by centralizing gold export proceeds and channeling them through the banking system, Reuters reported, citing Central Bank Governor Johnson Asiama. The Ghanaian cedi (GHS) has also surged about 38% this year, making it the world’s best-performing currency, according to Bloomberg.

While some analysts warn against overstating the impact of the metal’s rally, many see it as part of a broader rotation away from the USD. Countries such as Poland, Turkey, Uzbekistan, and Kazakhstan have been adding to their gold reserves. “The rally does benefit emerging markets more than developed markets. Emerging markets not only produce gold, they also hoard the metal,” said senior emerging-markets strategist at State Street Markets Ning Sun.

Gold’s meteoric rise is being powered by a mix of macroeconomic and geopolitical forces. Expectations of rate cuts from the US Federal Reserve have lowered the cost of holding non-yielding assets like gold, strengthening investor appetite, Reuters reported. Safe haven flows spurred by persistent geopolitical tensions — including renewed strains between the US and China — have intensified demand. Central banks have also played a pivotal role, continuing to diversify away from the USD and increase their bullion reserves, with surveys showing a growing preference for gold as a long-term store of value.

Reflecting these trends, HSBC raised its 2025 average gold price forecast to USD 3.4k per ounce last Wednesday, citing steady demand from institutional investors and official purchases seeking protection against volatility and currency weakness.

MARKETS THIS MORNING-

Asian markets are soaring this morning on bumper Hong Kong earnings and US trade optimism, with Hong Kong’s Hang Seng up 1.9% in early trading, while Japan’s Nikkei is up 1.5% and the Shanghai Composite is up 0.8%. Meanwhile, Wall Street futures are little changed following a broad rally yesterday.

THE CLOSING BELL-

The ADX fell 0.3% yesterday on turnover of AED 904.3 mn. The index is up 7.2% YTD.

In the green: Oman & Emirates Investment Holding Co (+12.7%), Abu Dhabi National Takaful Co (+5.8%) and Orascom Construction (+2.7%).

In the red: Multiply Group (-3.7%), Phoenix Group (-2.8%) and Abu Dhabi Ship Building (-2.8%).

Over on the DFM, the index fell 0.6% on turnover of AED 427.8 mn. Meanwhile, Nasdaq Dubai was down 0.4%.